Declining iron ore fines index and steep fall in Chinese steel prices last week has resulted in plunge in Indian pellet prices. According to market sources report to SteelMint, an Odisha based pellet maker has concluded pellet export deal of 50,000 MT pellets at USD 106/MT, CFR China (which is equivalent to USD 96-97/MT, FoB India). The material is for early April loading.
The pellet export price so witnessed is 7-month low as these levels were last seen in Aug’17.
On weekly basis, Indian pellet export price assessment has moved down by USD 5-6/MT.
Steep decline in spot iron ore fines prices in China over weak steel demand has lowered Indian pellet export price assessment. Iron ore fines Fe 62% fines index has decreased to USD 63/MT, CFR China as against USD 66.80/MT (20th Mar’18),a week before.
Further, comparatively low construction activities in March amid winters have reduced steel demand, which is otherwise rendered the beginning of extreme construction activities in China. The reduced demand is also attributed to extended steel production cuts which are to continue till mid November.
The pellet premium for Fe 65% marked decline to USD 44/DMT, CFR China against previous assessment of USD 44.85/DMT, CFR China.
Growing port stock inventory have further contributed to lower export prices. The pellet inventory grew by 0.5 MnT in a week, to 2.15 MnT on 23rd Mar’18 as against 1.95 MnT assessed on 16th Mar’18.
Earlier, towards the end of Feb, JSPL- India’s largest pellet exporter exported 50,000 MT pellet for exports at around USD 118/MT, CFR China. The export prices in March have reduced by around USD 12/MT, CFR China.
Factors that may lend support to Indian Pellet export prices
According to reports, China’s key steel producing region Hebei has recently released its new steel capacity cut plans for three years starting from 2018 to 2020. The province plans to cut steel capacity of 10 MnT in 2018, another 10 MnT in 2019, and 20 MnT in 2020 in order to keep the region’s steel capacity within the limit of 200 MnT by the end of 2020.
With more restrictions on sinter usage, the mills might rely more on pellets which may result in increase in offers in near term.
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