India: Pellets export shipments fall 10% m-o-m in Apr’22 on lower Chinese buying

India’s pellets export shipments were recorded at 1.33 million tonnes (mnt) in April 2022, a fall of 10% m-o-m as against 1.48 mnt in March 2022, according to vessel line-up data maintained with SteelMint.

Exports to China fall over 40%

China continued to be the largest importer of pellets from India at 0.35 mnt in April but the volumes decreased by 41% m-o-m compared to 0.59 mnt in March.

Surprisingly, Croatia occupied the second position among the top importers’ list at 0.16 mnt followed by Malaysia and South Korea at 0.09 mnt and 0.07 mnt, respectively.

Shipper-wise exporters

AM/NS India was the largest pellet exporter in April at 0.34 mnt but the shipments were down compared to 0.54 mnt in the previous month.

BRPL stood as the second-largest exporter at 0.32 mnt followed by Rashmi Metaliks and Southern India-based KIOCL with 0.24 mnt and 0.17 mnt, respectively.

Why did pellets export fall in April 2022?

• Lower Chinese buying: Indian pellet export volumes remained on the lower side in April due to weaker Chinese buying. Not many traders and Chinese buyers were active due to rising Covid cases which also led mills to lower their steel production. High-grade ore and pellets demand weakened amidst thin profit margins.
• Volatile global iron ore prices: The benchmark Fe 62% fines index decreased by $13/t in mid-March to $136/t CFR China when compared to $149/t in mid-February. Seaborne iron ore prices fell as market participants were cautious about procuring seaborne cargoes due to high fluctuations in prices.
• Higher domestic realisations: SteelMint’s pellet export index (Fe 64%, 3% Al, FOB east coast) stood at $168/t in mid-March. On the other hand, SteelMint’s domestic pellet index was recorded at INR 14,000/t ($184/t), DAP Raipur in the month under review. With domestic prices rising significantly, Indian pellet makers turned aggressive in domestic sales, amidst lower exports realisation.

Outlook

Indian pellet export bookings may remain less active from both the EU and China on bearish steel sentiments. Production curbs, along with the Covid surge and short-term demand drop, may have a negative impact on China’s raw material prices too.