- Chinese spot iron ore prices fall to 4-month low as futures plunge
- Recent Indian pellet export tenders fetch dull response
- Bid-offer disparity limits trade
BigMint’s India pellet (Fe 63%, 3% Al) export (FOB east coast) index fell by $3/t to $112/t on 21 February 2024. No deals were recorded from the east coast of India in this publishing window amid bid-offers disparity between buyers and sellers. Export prices fell as iron ore futures on the Dalian Commodity Exchange (DCE) for May 2024 contract sharply decreased by $10/tonne post the Lunar New-Year holidays.
South India-based pellet producer conducted a tender for exports of 50,000 t of iron ore pellets (Fe63%, 8% Al2O3 + SiO2) today. As per sources, the response from buyers was very poor, and not feasible for the pellet maker to conclude at that level. In another pellet export tender floated by an east India-based player is also learnt to have received weak response.
Bids for imported pellets in the overseas market sharply decreased in the seaborne market following the poor still margin and low restocking activity in the China market.” Just traders may be seen currently to take positions, otherwise mills aren’t active at the moment, highlighted a trader.
Few ports-based Indian players are targeting $132-135/t CFR China, but no firm bids were heard.
“The overseas buyers are not ready to book material over $120/t CFR China for the premium material following the iron ore and steel market in the domestic China region. While sellers were not hurried to sell the material and remained sidelined from the pellet export market.”, highlighted a source.
On the other hand, a few Chinese sources said that portside offers in China for Indian pellets (Fe 63.5%) have declined by around RMB 55/t ($8/t) w-o-w on 21 February. The offers were recorded at around RMB 1,090/t at ($151/t) Qingdao inclusive of all import taxes and port charges.
Steel mills are suffering more losses as a result of the significant daily decline in finished steel pricing. High-grade fines or pellets may not be an affordable option for their restocking at this time. Hence, low grade ore is in demand in China currently.
Rationale:
- No pellet export deal was recorded and thus not taken into consideration. It was given 0% weightage in index calculation Click here for methodology.
- Fifteen (15) indicative prices were received, and fourteen (14) were considered for calculation of the index, and given a 100% weightage.
India’s weekly pellet exports
India’s pellet export shipments stood at 463,450 t in the third week of February compared to 174,300 t in the second week of February, as per vessel line-up data maintained with BiglMint.
Market highlights:
- Domestic realisations better than exports: Domestic pellet (Fe 63%) prices remained stable at w-o-w to INR 8,250/t ($99/t) exw in Barbil, eastern India. On the other hand, BigMint’s pellet export ex-plant price realisation for Barbil fell by INR 200-300/t to INR 7,650-7,750/t ($92-93/t) exw this week. The domestic realisation remained INR 500/t ($6/t) higher than exports; which increased by INR 250/t ($3/t) compared to last week.
- Global iron ore prices fall d-o-d: The benchmark Fe62% fines index sharply decreased by $7/t d-o-d to $122/t CFR China on 20 February. Prices are hovering at a 4-month low. Steel mills have lower-than-expected restocking demand for iron ore, as market participants wait for greater clarity on prices.
- DCE iron ore futures decline w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for May 2024 contract sharply decreased by RMB 70.5/t ($10/t) to RMB 893/t ($124/t) on 21 February compared to RMB 963.5/t ($134/t) before Lunar holidays. On a d-o-d basis, prices fell by RMB 16.5 ($2/t) as against RMB 909.5/t ($127/t) yesterday.
- Pellet port inventories in China up: Pellet inventories at China’s major ports increased by 0.5 mnt to 7.2 mnt on 18 February compared to 6 February. The pellet inventory at the main ports of China was recorded at an eight-month high level, previously; it was seen in the mid of June 2023.
Outlook:
As per BigMint’s analysis, pellet prices will remain under pressure following the sluggish approach from buyers. The Chinese steelmakers are also hesitating to book premium material for restocking amid poor steel margins.