SteelMint: India’s pellets exports slows down on limited Chinese buying

India’s pellet export trade has slowed down against last week, despite the index witnessing slight improvement. SteelMint’s India pellets (Fe 63%, 3% Al) export index, FOB east coast, was recorded at $106/t, up by $3/t w-o-w. 

According to a Chinese trader, trade houses with Indian pellet cargoes have received limited enquiries. Prices rose due to bullish sentiment fuelled by improving demand and the relaxation of pandemic measures in some Chinese cities, while the portside market saw limited speculative demand.

Rationale

• No deal was reported so far this week, hence, not taken into price calculation under T1 trade and given 0% weightage in index calculation. Click here for methodology.
• Ten (10) indicative offers and bids were received out of which eight (8) were considered for calculation of the index and given 100% weightage.

“Despite the paper market being strong in China, the physical market is yet to see a strong pickup. Demand for lump is getting stronger over pellets which has lowered enquiries for pellets,” highlighted a source. 

Tenders:

• AM/NS India floated a tender for 55,000-75,000 t of pellet (Fe 62.5%, 3% alumina and 5.5% silica) for early January 2023 laycan. The tender was under negotiation till the time of publishing this report.

Market highlights

• Domestic realisations higher than exports: As per SteelMint analysis, domestic pellets (Fe 63%, 3% Al) offers are at INR 7,500/t ($91/t) loaded on to wagon for Barbil, eastern India. On the other hand, SteelMint’s pellets export prices ex-plant for the Barbil region are assessed at around INR 6,700-6,800/t ($81-83/t). Removal of the export duties may benefit the merchant pellets players who were largely dependent on overseas sales.
• Global iron ore prices up amid Covid-19 relaxation: The benchmark Fe 62% fines index increased by $8.45/t w-o-w on 6 December to $109.70/t CFR China as against $101.25/t a week ago. Several Chinese cities that have eased Covid-19 restrictions and lockdowns have boosted iron ore sentiment over the last week.
• DCE iron ore futures up w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for January contract closed on 2 December, 2022 (at 3 pm) at RMB 787.5/t, up RMB 17/t ($2/t) as against RMB 770.5/t on 29 December, 2022. Prices moved up by around RMB 21/t($3/t) d-o-d.
• Port inventories in China edge down w-o-w: Pellets inventory at China’s major ports stood at 5.6 mnt this week against 5.8 mnt a week ago.