SteelMint’s pellet export index (FOB east coast India) increased further to $170/t, up by $12/t w-o-w. Falling pellet inventories at Chinese ports, limited offers from India and increased inquiries before Chinese New Year holiday led to the price hike. In the last two weeks prices have increased around $29/t.
Few market participants highlighted that there are robust inquiries from Chinese mills for pellets. However, supply tightness from India and few other countries have raised bids. Brazilian miner Samarco is planning to restart operations in late December, however, The company initially expects to operate at 26% of capacity, which is 30.5 million tonnes of iron ore pellets annually.
A few Indian pellet makers are even targeting $185/t CFR China levels for Fe 63% grade pellets. Southern India based pellet maker – KIOCL has floated a pellet export sale tender for about 50,000 t. However, the export quantity may change, sources have reported SteelMint. The tender due date was 16th Dec ’20 among the empanelled customers.
Rationale: No pellet export deal (T1) heard so far in this week. Therefore, weightage of T1 transferred to calculation of T2 inputs.
SteelMint has received seven indicative prices (T2) and all were taken into consideration with an average price of $170/t FOB India and given weightage of 100%.
Spot iron ore fines price increased by $6/t – Chinese spot iron ore fines (Fe 62%) increased by around $6/t on a weekly basis and stood at $ 155.75/t CFR China yesterday against $149.95/t a week before. Prices are trading at nine-year high levels. However on daily basis prices were increased yesterday by $1.25/t.
Pellet inventories in Chinese ports fall by 2 mn t – Pellet inventory at major Chinese ports have been decreasing since last one month. Last week, pellet inventories fell by around 2.1 mn t to 7 mn t against 9.1 mn t a month before as per data maintained by SteelHome. Similarly, on weekly basis inventories fell by 0.6 mn t against 7.6 mn t last week.
Domestic pellet trades in eastern India remain limited- Indicative prices from Barbil mostly stable 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 bullish and limited deals were heard in the last one week. Few traders are reported to have raised pellet offers to INR 10,900-11,000/t loaded.
Gap between realization in domestic and export widens- Gap between pellet export realization and domestic offers has increased this week and stands around INR 300-600/t (around $4-8/t), as per SteelMint’s analysis. However with higher realizations in domestic market, export volumes may remain low.
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