New York (Platts)--2Mar2011/537 am EST/1037 GMT
Kazakhstan mining group Eurasian Natural Resources Corporation is shipping around 11 million mt/year of iron ore pellets to Russian steelmaker MMK on a formula based on a premium to Platts IODEX, ENRC CEO Felix Vulis said Tuesday. Speaking at the BMO Capital Markets 2011 Metals & Mining conference webcast from Hollywood, Florida, Vulis said the change to this type of pricing was made after the collapse of annual contract pricing last April. In response to a question about the level of premium ENRC was achieving over fines, compared with other iron ore producers, Vulis declined to answer, other than saying that the sales to MMK were at a premium to IODEX. The analyst asking the question estimated that Brazilian producer Vale was achieving a premium of around $50/mt for pellets over fines. Platts data indicates that Vale is likely to receive a premium of $51.09/mt for Tubarao pellets over Tubarao fines on a CFR Qingdao basis in the second quarter. Vulis said that ENRC had to be "careful on how we structure our pricing," because Russia was "long on iron ore" and is a net exporter. He said MMK's plant was approximately 300 km from ENRC's iron ore operations, which made its product very competitive. Vulis also declined to say how ENRC was pricing long-term contracts to Chinese steel mills. ENRC ships approximately 6 million mt/year of pellets to steel mills in northwestern China by railroad from Kazakhstan in a competitive marketplace, with ENRC's product competing with seaborne iron ore imports.--Anthony Poole, anthony_poole@platts.comSimilar stories appear in Steel Markets Daily. See more information at http://bit.ly/SteelMarketsDailyFor the Platts daily iron ore price assessment, commentary and historical price chart, visit http://www.platts.com/DailyIronOreCommentary