SteelMint: India’s pellet export index surges on active trades of 100,000 t

India’s pellets export trade has improved over the previous week on active trades. SteelMint’s India pellets (Fe 63%, 3% Al) export index, FOB east coast, was recorded at $117/t, up by $8/t w-o-w. Participants on the Indian side expressed optimism about a recovery in Chinese demand for Indian pellets amidst restocking needs ahead of the holidays.

With China still coping up with an increasing number of Covid-19 infections and the country fast approaching its Lunar New Year holidays, Chinese steel mills have been restocking the material. Overall, Chinese steel mills and market participants are optimistic about an improved steel demand post-holidays and a decent hike in the raw material prices to recover current import losses.

India’s pellets export shipments were recorded at 75,000 t in the first week of January 2023 in comparison with 221,000 t in the previous week, according to vessel line-up data maintained with SteelMint. 

Rationale

• Two deals were reported for around 100,000 t this week and taken into price calculation under T1 trade hence given 50% weightage in the index calculation. Both the deals were concluded by eastern India-based pellets manufacturers at $128-130/t CFR China with a quantity of 50,000 t each.  Click here for methodology.
• Seven (7) indicative offers, and bids were received, and five (5) were considered for calculation of the index, given a 50% weightage.

Market highlights

• Export realisations increase w-o-w  : As per SteelMint’s analysis, domestic pellets (Fe 63%, 3% Al) offers are at INR 8,500/t ($104/t) loaded on to wagon for Barbil, eastern India. On the other hand, SteelMint’s pellets export prices ex-plant for the Barbil region improved to around INR 7,800/t ($95-96/t). 
• Global iron ore prices up on improved buying activity: The benchmark Fe 62% fines index increased by $4.5/t w-o-w on 10 January to $122.15/t CFR China as against $117.65/t a week ago. The spot prices of iron ore in China rose w-o-w because the iron ore market received price support from the property market policies in China.
• DCE iron ore futures edge up w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for May 2023 contract closed on 11 January, 2023 (at 3 pm) at RMB 847.5/t, inched up by RMB 1/t ($0.15/t) as against RMB 846.5/t on 4 January. Prices rose by RMB 8/t ($1/t) d-o-d.
• Port inventories in China edge down w-o-w: Pellets inventory in China’s major ports stood at 5.25 mnt this week against 5.3 mnt a week ago.