Indian pellet export index climbs to around 2-month high on active deals

• Export deals of 240,000t pellets were concluded in last one week from Indian players
• Global iron ore fines index up by $15 w-o-w

SteelMint’s India pellet export index (Fe 64%, 3% Al, FOB east coast) has rallied by around $10 on a w-o-w basis to $137/tonne (t). The index has increased to close to two month high as similar price levels were seen towards the beginning of Nov’21. Nearly four pellet export deals of 240,000t in total have been confirmed by SteelMint to, concluded by the Eastern India pellet makers since mid-of last week.

Rationale:

• Three deals were heard to be concluded in this publishing window and out of that two were taken for calculation. Hence, the weightage given was 50%.
• Nine (09) indicative offers and bids were received, and seven (07) were considered for calculation of the index, given a weightage of 50%.

Confirmed deals:

The recovery in global iron ore prices have triggered some optimism amongst traders which have pushed them to take positions. The spot price of benchmark iron ore Fe 62% fines increased to $123.8/t CFR China on 21 Dec, up by $15/t w-o-w. DCE iron ore futures’ May’22 contract closed today at RMB 693/t ($109), up by RMB 44/t w-o-w.

Pellet inventory at China’s major ports was recorded at 3.8 mn t this week, as against 4 mn t a week ago.

As per SteelMint analysis, domestic pellet (Fe 64%, 3% Al) ex-plant realization is assessed at INR 8,300-8,500/t for Barbil, eastern India. On the other hand, SteelMint’s domestic price assessment for the Barbil region stood at INR 8,500-9,000/t loaded to wagon. Thus, the price gap between the two has narrowed down with a recovery in global prices.

Outlook: Pellet export deals from a few more players are underway as sellers are expecting prices to hike further, however with New Year holidays arriving, global prices are expected to remain range bound in the near term.