- Low Chinese interest, high domestic iron ore prices keep sellers cautious
- Pellet exporters opting for domestic deals due to better margins
The Indian pellet export market remained rangebound this week, as stable global indices and limited seaborne buying interest continued to weigh on sentiment. Market participants noted that Chinese buyers showed minimal interest in Indian material, instead opting for lower-priced alternatives.
BigMint’s India pellet (Fe 63%, 3% Al) export index (FOB east coast) fell by $2/tonne (t) w-o-w to $93.5/t on 30 April 2025 against the previous assessment on 23 April. No export deal was recorded in this publishing window.
A trader commented: ” There is barely any inquiry from Chinese mills this week. Whatever little we receive, the counter offers are too low to consider.”
With export prices failing to match the cost of production, sellers are finding it increasingly difficult to close deals. Domestic iron ore fines prices remain high, further squeezing margins for pellet producers.
Commenting on the current market dynamics, a pellet producer stated: “Current seaborne prices don’t justify production costs. We are unable to match the export levels given the elevated costs of raw materials.”
Domestic prices exceeded export offers by INR 1,950/t ($23/t), and remained largely stable compared to last week. Pellet (Fe63%) prices in Odisha’s Barbil were recorded at INR 8,050/t ($95/t) exw, firm w-o-w. Meanwhile, ex-plant realisation in exports from Barbil stood at INR 6,150/t ($73/t) exw.
As a result, many sellers have adopted a wait-and-watch approach. Some are shifting focus to the domestic market to manage growing inventories, where demand and realisations remain healthier compared to exports.
A seller informed: “At this point, domestic sales offer better returns. We are trying to liquidate inventory through local bulk contracts.”
However, some sources suggested that market participants might be closer to wrapping up their portside restocking activity ahead of the holidays.
The upcoming Chinese Labour Day holidays in early May (1-5 May) are expected to further dampen trading activity, keeping market participants cautious. In the near term, the Indian pellet export market is likely to remain in a narrow range until demand signals improve post-holiday.
Rationale
- No confirmed deals from India’s east coast were recorded in this publishing window for T1 trade. Thus, this category was not taken into consideration for today’s price calculations and accorded 0% weightage in the index calculation. Click here for the detailed methodology.
- Nine (9) indicative prices were received, and seven (7) were considered for the calculation of the index and given 100% weightage.
Factors impacting pellet exports
Chinese iron ore fines prices stable w-o-w: The benchmark iron ore fines index remained largely stable w-o-w at $99/t CFR China on 29 April. Limited but fresh trading activity supported prices, even as the broader market outlook remained weak. The recent rise in molten iron production boosted market optimism, prompting mills to explore the spot market for pre-holiday purchases. However, renewed rumours of production cuts tempered buying sentiment, particularly for premium products.
DCE iron ore futures drop w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for the May 2025 contract decreased w-o-w by RMB 24 ($3/t) to RMB 703.5/t ($97/t) on 30 April. On a d-o-d basis, futures remained stable.
Iron ore pellet inventories at major Chinese ports rose by 0.25 mnt w-o-w to 4.9 mnt on 24 April, according to data published by SteelHome.
Outlook
As per BigMint’s analysis, pellet export offers will remain under pressure amid the Labour day holidays and weak buying appetite.
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