India pellet export index falls to over 3-month low on limited Chinese buying

India’s pellet export market continued to remain inactive for yet another week. SteelMint’s India pellet (Fe 63%, 3% Al) export index (FOB east coast) decreased by $13/t w-o-w to $145/t on 27 April, 2022 from $158/t on 20 April. The index has fallen to over three-month low, as per data maintained with SteelMint.

Rationale

• One deal was reported this week so far but not taken into price calculation as it was done on index basis and not considered under T1 trade and hence given no weightage in index calculation. Click here for methodology.
• Eight (08) indicative offers, and bids were received, and six (06) were considered for calculation of the index, given 100% weightage.

The market is not very active at the moment. One deal was heard concluded at $24/t premium on the Fe 62% fines index, by an eastern India-based pellet maker this week.

A couple of eastern India-based suppliers were seen offering pellets for exports but no deals were heard so far this week. Buying enquiries from China and the EU remained subdued.

Sources said that confidence over the health of the Chinese economy weakened due to the spreading omicron infections in China, as almost all markets including equities, forex and commodities suffered substantial losses.

Market highlights

• Domestic realisations largely at par with exports: As per SteelMint analysis, domestic pellet (Fe 63%, 3% Al) offers are at INR 10,000/t ($131/t) loaded on to wagon for Barbil, eastern India. On the other hand, SteelMint’s pellet export price on ex-plant basis for the Barbil region remains at around INR 9,600-10,000/t ($125-131/t) exw.
• Global iron ore prices fall sharply w-o-w: The benchmark Fe 62% fines index decreased sharply by $10.9/t w-o-w on 26 April to $138.95/t CFR China. Seaborne iron ore prices plummeted as spreading coronavirus infections in China clouded demand outlook.
• DCE iron ore futures down w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for September contract closed today (at 3 PM) at RMB 826.5/t, down RMB 71.5/t ($11/t) as against RMB 898/t on 20 April, 2022. Iron ore and steel futures fell due to growing concerns in the market about slump in domestic demand for steelmaking raw materials as the pandemic spreads across China. However, on a daily basis, prices increased by around RMB 17.5/t ($3/t).
• Port inventories in China inch down w-o-w: Pellet inventory at China’s major ports inched down to 4.6 mnt this week against 4.95 mnt a week ago.