SteelMint: India’s pellet export index edges down, market awaits China’s return

India’s pellet export trading activities slowed down this week after a couple of deals concluded in the last week. SteelMint’s India pellet (Fe 63%, 3% Al) export index (FOB east coast) inched down by $1/t w-o-w to $144/t on 4 May, 2022 from $145/t on 27 April. With Chinese players enjoying Labour Day holidays, the expected return of players tomorrow may offer further clarity on the market.

At the portside, trading volumes were limited as steel mills were almost done with pre-holiday restocking, sources said.

Rationale

• Two deals were reported towards the end of last week and taken into price calculation under T1 trade and hence given 50% weightage in the index calculation. Both the deals were concluded by eastern India-based pellet players at $163-165/t CFR China with the quantity of 55,000t each.  Click here for methodology.
• Seven (07) indicative offers, and bids were received, and four (04) were considered for calculation of the index, given 50% weightage.

Seaborne trading activity remained muted during early Asian trade, but the week saw improvement in volumes due to a narrowing seaborne-portside price spread.
“The Covid-19 situation that resulted in lockdowns and transportation problems is the main contributor to the weaker trading activity in Tangshan ports,” sources said.

Market highlights

• Domestic pellet realisations higher than 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 9,500/t ($124/t) exw.
• Global iron ore price clarity awaits Chinese return: The benchmark Fe 62% fines index edged up by $3.4/t w-o-w on 29 April to $142.35/t CFR China. Due to the Labour Day holidays in China, the prices have not been released so far in this week.
• DCE iron ore futures inched up before holidays: Iron ore futures on the Dalian Commodity Exchange (DCE) for September contract closed on 29 April, 2022 (at 3 pm) at RMB 869.5/t, up RMB 43/t ($7/t) as against RMB 826.5/t on 27 April, 2022. On a daily basis, prices increased by around RMB 18/t ($3/t).
• Port inventories in China increase w-o-w: Pellet inventory at China’s major ports increase to 5 mnt this week against 4.6 mnt a week ago.