Indian pellet export market remains silent

SteelMint’s weekly pellet export index (FOB east coast India) stands at $181/t, up by $4/t w-o-w. Few eastern India based pellet makers were heard offering pellets (standard Al) around $195-200/t CFR for end-Jan’21 laycan.

However, a sharp decline in iron ore & steel futures and spot iron ore fines index in China since the last two days have turned the market sentiments bearish. Traders being uncertain of future market trends, have remained away from concluding deals, sources reported to SteelMint.

Chinese market participants highlighted that pellet demand is decent from Chinese mills but as the iron prices have been declining from the last few days, this has discouraged the steel mills in China from holding inventories.

Rationale: No pellet export deal (T1) heard so far in this week. Therefore, weightage of T1 transferred to calculation of T2 inputs.

However, there were two pellet deals reported to have concluded last week.

• One of the major pellet makers in eastern India concluded a deal for one shipment of pellets (Fe 63%) at $192/t CFR China for mid-Jan laycan.
• Another unconfirmed deal was heard to have concluded by Odisha based pellet maker at around $194-195/t CFR China last week. However, it could not be confirmed from sellers end till the time of publication of this report.
• SteelMint has received eight indicative prices (T2) and only six were taken into consideration with an average price of $181/t FOB India and given weightage of 100%.
• Spot iron ore fines price decreased by $4/t – Chinese spot iron ore fines (Fe 62%) index decreased by around $4/t on a weekly basis and stood at $158.9/t CFR China today against $164.25/t a week before. However, in the last two days spot prices have dropped by around $5/t against $164.25/t CFR, China two days back.
• Pellet inventories in Chinese ports increase – Pellet inventory at major Chinese ports have increased. Last week, pellet inventories increased by around 0.2 mn t to 7.1 mn t against 6.9 mn t a week before as per data maintained by SteelHome. However, on a monthly basis inventories have come down by 1.05 mn t against 8.15 mn t a month before.
• Domestic pellet prices in eastern India rise- Indicative prices from Barbil have increased in the domestic market this week. SteelMint’s pellet price assessment from Barbil (Odisha) increased around INR 400-500/t to INR 11,900-12,000/t (loaded to wagon) this week.Gap between pellet export realization and domestic offers narrowed down. Thus it seems, Indian pellet makers are active in selling pellets in domestic market for now rather than concluding export deals at lower bids.