SteelMint: India pellet export index up $4/t w-o-w tracking global iron ore price recovery

SteelMint’s India pellet (Fe 63%, 3% Al) export index FOB east coast was recorded at $115/t, up by $4/t w-o-w following a hike in iron ore fines prices in the China’s spot and futures markets. DCE iron ore futures increased by RMB 14 ($2/t) d-o-d today.

An eastern India-based pellet maker concluded a 75,000 t (Fe 62.5%) export deal at $130/t CFR China, sources informed. However, the confirmation could not be received from either of the parties at the time of publishing this article.

India’s iron ore pellet export shipments were recorded at 338,350 t in the fourth week of March in comparison with 115,000 t in the third week, as per vessel line-up data maintained with SteelMint.

Rationale

• No deal was recorded this week and hence, not considered for price calculation under T1 trade, thus, given 0% weightage in index calculation. Click here for the methodology.
• Eight (8) indicative offers and bids were received, and seven (7) were considered for calculation of the index, given 100% weightage.

Market highlights:

• Realisations in domestic market still better: Domestic pellet (Fe 63%, 3% Al) prices stood at INR 9,400-9,600/t loaded on to wagon for Barbil, eastern India. On the other hand, SteelMint’s pellet export prices ex-plant for the Barbil region were at INR 7,400-7,500/t this week.
• Global iron ore prices down w-o-w, but recover d-o-d: The benchmark Fe 62% fines index inched down by $1/t w-o-w on 28 March to $123.7/t CFR China as against $124.7/t, a week ago. Trade participants saw the buying potential in the seaborne market after prices fell significantly for over a week. Sources stated that the impact of production cuts in China is already visible. However, prices have recovered d-o-d on the back of strong buying activity amid improved import margins.
• DCE iron ore futures slide w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for May 2023 contract closed at RMB 896/t on 29 March , down sharply by RMB 30.5/t ($4.5/t) against RMB 926.5/t on 22 March.
• Port inventories in China improve: Pellet inventory in China’s major ports stood at 7 mnt this week, largely stable against 6.65 mnt a week ago.

Outlook

Though some deals were reported last week but it may be interesting to watch if this trend continue to sustain as margins of Chinese steel makers are getting thinner and they are mostly dependent on sintering process for cost-effectiveness.