SteelMint: India pellet export index drops to one-month low

SteelMint’s India pellet export index (Fe 64%, 3% Al, FOB east coast) has fallen by $18/t, w-o-w, to $124/t. The index has fallen to a new low in over a month, as per data maintained with SteelMint.

Production curbs imposed in China have resulted in increased preference for high-grade iron ore. However, the expected winter sintering restrictions may boost preference for lumps over pellets amidst high pellet offers in the market. Also, falling steel margins has resulted in reduced pellet demand.

The production curbs in the winter heating season have led to reduced Chinese demand for Indian pellets. However, SteelMint learnt from market participants that a few non-Chinese destinations are evincing increased interest in Indian pellets.

The spot price of benchmark iron ore Fe 62% fines decreased by $10.2/t, w-o-w, on 10 Nov to $89.5/t CFR China as against $99.7/t a week ago. DCE iron ore futures’ Jan’22 contract closed at RMB 536.5/t ($83.95) (-RMB 24.5), d-o-d.

As per SteelMint data, total pellet exports from Indian ports for the week (31 Oct-6 Nov) were recorded at 107,000t as against 55,000t last week.

Rationale:

• No deal was heard concluded in this publishing window. Hence, the weightage given was 0%.
• Eight (8) indicative offers and bids were received, and six (6) were considered for calculation of the index, given a weightage of 100%.

Market highlights

• Pellet inventory at Chinese ports down, w-o-w: Total pellet inventory at China’s major ports was recorded at 4.1 mn t last week, as against 4.3 mn t the week before.
  
• Domestic pellet prices down, w-o-w: SteelMint’s bi-weekly domestic pellet (Fe 63%) index, PELLEX, fell sharply by INR 650/t to INR 12,350/t DAP Raipur on 9 Nov. The index has hit its lowest point in over a month, with similar price levels last seen in early-Oct.
• KIOCL floats pellet export tender: State-owned pellet producer KIOCL has issued an export tender for one shipment (Fe 63%, alumina content 2%), as per SteelMint reports. The tender, due on 11 Nov, is only for KIOCL’s empanelled customers.
• Freight rates fall further: Freight rates for 50,000 t-55,000 t export vessels from India’s east coast (Paradip) to China have dropped by $1/t, w-o-w, to $19/t this week.