Indian pellet export market regains momentum,index rises sharply by $17/t

• Spot iron ore fines index in China nears to $150/t CFR, close to nine-year high
• Rally in futures, bullish flat steel market sentiments in China has kept high-grade ore demand supported
• Limited pellet trades in the Indian domestic market resulted in some export trades from India

SteelMint’s pellet export index (FOB east coast India) increased to $158, up by $17/t w-o-w. A couple of pellet export deals have been heard to have concluded in a week’s time. Bullish Chinese demand, falling pellet inventories at Chinese ports and restocking by steel mills before Chinese New Year holiday led to the price hike.

Rationale: One confirmed pellet export deal (T1) was concluded by the eastern India based pellet maker for 55,000 t this week at $159/t FOB India for Jan’21 shipment. This deal was considered for calculation of index and given weightage of 50%.

SteelMint has received six indicative prices (T2) and all were taken into consideration with an average price of $157/t FOB India and given weightage of 50%. Vessel freight rate from India to China has remained the same at around $11/t this week.

• Spot iron ore fines price nears nine-year high- Chinese spot iron ore fines (Fe 62%) increased by around $17/t on a weekly basis and stood at $ 149.95/t CFR China yesterday against $133.05/t a week before. Prices are nearing to nine-year high levels as similar levels were seen in Mar 2012, as per SteelMint data.
• Pellet inventories in Chinese ports fall further- Pellet inventory at major Chinese ports have been decreasing since last one month. Last week, pellet inventories fell by around 0.55 mn t to 7.6 mn t as per data maintained by Steelhome.
• Domestic pellet prices in eastern India, trades remain limited – Indicative prices from Barbil increased marginally around INR 100-200/t in the domestic market this week. SteelMint’s pellet price assessment from Barbil (Odisha) stands at INR 10,500-10,800/t (Loaded to wagon) this week. However, domestic market sentiments are slightly bearish and limited deals were concluded at increased offers.
• Gap between realization in domestic and export narrows down- Gap between pellet export realization and domestic offers has narrowed down and stands around INR 200-400/t (around $3-5/t), as per SteelMint’s analysis. Amid increasing demand from China and sharp hike in fines index, Indian pellet export prices have shot up.