India’s pellet export trade has improved following the export duty withdrawal by the Indian government last week. SteelMint’s India pellet (Fe 63%, 3% Al) export index, FOB east coast, was recorded at $103/t, up by $2/t w-o-w. Market participants seemed to be awaiting tender outcomes for further clarity on prices.
However, the index seemed to be up following the increase in global iron ore prices.
Rationale
- One deal was heard this week, but it was not taken for price calculation under T1 trade and given 0% weightage in index calculation. Click here for methodology.
- Six (06) indicative offers and bids were received out of which four (4) were considered for calculation of the index and given 100% weightage.
Deals of around 200,000 t of pellets were reported from eastern India-based players last week at $111-112/t, CFR China. However, this week, price indications were heard higher by $2-3/t against last week.
Ongoing tenders:
- State-owned KIOCL has floated a tender for 50,000 t of pellets (Fe63%, 8% SiO2+Al2O3). The due date for the tender is 30 November, 2022 and has been floated only for KIOCL’s empanelled customers. A couple of tenders have also been floated by the company for domestic sales via road and sea routes. The company has recently notified that the pellets plant operations in Mangalore have again resumed from 24 November, 2022.
- AM/NS India had floated a tender for 55,000-75,000 t of pellet exports for early January 2023 laycan.
Market highlights
- Domestic pellet realisations higher than exports: As per SteelMint analysis, domestic pellet (Fe 63%, 3% Al) offers are at INR 7,300/t ($90/t) loaded on to wagon for Barbil, eastern India. On the other hand, SteelMint’s pellet export prices on ex-plant basis for the Barbil region are assessed at around INR 6,500-6,550/t ($80/t). Removal of the export duties may benefit the merchant pellet players who were largely dependent on overseas sales.
- Global iron ore prices up on upcoming Chinese Spring Festival: The benchmark Fe 62% fines index increased by $5.05/t w-o-w on 29 November to $101.25/t CFR China as against $95.20/t a week ago. Trading activity in the seaborne material rose as Chinese end-users start storing up for the Chinese Spring Festival, which starts in early 2023.
- DCE iron ore futures up w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for January contract closed on 30 November, 2022 (at 3 pm) at RMB 770.5/t, up RMB 38/t ($5/t) as against RMB 732.5/t on 23 May, 2022. On a daily basis, prices moved up by around RMB 15/t ($2/t).
- Port inventories in China up w-o-w: Pellet inventory at China’s major ports stood at 5.8 mnt this week against 5.7 mnt a week ago.
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