- Iron ore spot, futures prices fall sharply
- Steel production control in China impacts market
- Limited bids witnessed for Indian pellets
BigMint’s India pellet (Fe 63%, 3% Al) export index (FOB east coast) declined by $13/t w-o-w at $96/t on 5 June 2024. No deal was recorded from the east coast in this publishing window, as per data maintained by BigMint. The exporters received only a few bids in the downtrend market at lower prices.
Indian pellet offers in the export market fell sharply this week amid weak sentiments in China. The Chinese government announced plans on 29 May to regulate steel production capacity and output as part of the 2024-2025 Energy Saving and Carbon Reduction Action Plan. Sources indicated that the market was still feeling the impact of this news as the new week commenced.
The benchmark iron ore fines index decreased significantly w-o-w by around $11/t to $107/t CFR China on 4 June. Prices fell over the week amid weak market sentiments and higher port stock levels.
Market participants said that there is no margin at exporting pellets at current prices as prices have fallen to around $13-15/t w-o-w for seaborne material. Exporters are in wait-and-watch mode and expecting price clarity in the near term. The export realisation has also fallen for premium material amid lower demand from China.
On the other hand, domestic prices are around INR 1,600/t ($19/t) higher than export offers. Pellet (Fe 63%) prices in Barbil fell by INR 200/t ($2.5/t) w-o-w to INR 8,900/t exw ($107/t). However, ex-plant realisation for pellet exports in Barbil fell sharply by INR 1,000/t ($12/t) w-o-w to INR 6,400-6,500/t exw ($77-78/t).
A pellet producer stated: “The Chinese government’s steel regulation announcement has significantly impacted the market. Buyers are showing limited interest in booking Indian pellets at higher offers. Even port-based plants are experiencing negative margins at current buyer bids”.
Chinese sources said that Qingdao portside offers for Indian pellets (Fe 63.5%) dropped by RMB 50/t ($7/t) w-o-w on 5 June. Offers were recorded at around RMB 985/t ($135/t), inclusive of all import taxes and port charges. However, portside offers inched down by around RMB 10/t ($1/t) d-o-d.
Rationale:
- No pellet export deal was recorded in this publishing window and hence accorded 0% weightage in the index calculation Click here for detailed methodology.
- Ten (10) indicative prices were received, out of which five (5) were considered for calculation of the index and given a 100% weightage.
Market dynamics
- DCE futures sharply fall w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for the September 2024 contract decreased by RMB 66/t ($9/t) w-o-w to RMB 825 ($113/t) on 5 June, 2024. On a d-o-d basis, future prices fell by RMB 9/t ($1/t) against RMB 834/t ($115/t) yesterday.
- Pellet inventories drop w-o-w: Pellet inventories at China’s major ports inched down by 0.2 mnt to 6.7 mnt on 30 May, 2024 compared to last week, according to SteelHome data.
Weekly exports increase
India’s pellet exports were recorded at around 135,500 t in the last week of May compared to 164,000 t in the fourth week, as per vessel line-up data maintained with BigMint.
Outlook
Pellet export offers in the seaborne market are expected to remain under pressure as no positive demand sign was seen in the Chinese market for Indian pellets. Meanwhile, spot and future iron ore prices will also drive Indian pellet prices in the seaborne market.
