India: BigMint’s pellet export index inches down w-o-w in sluggish market

• Global iron ore fines prices remain under pressure
  
• Deals from India stay subdued on falling margins
  
• Buyers are in wait-and-watch mode amid low bids
  

Indian pellet prices in the seaborne market continued to fall amid a lack of trading activity. BigMint’s India pellet (Fe 63%, 3% Al) export index (FOB east coast) decreased by $0.5/tonne (t) w-o-w to $83.5/t on 18 September 2024. In the last few weeks, pellet export deals from India have dried up due to low bids and falling margins.

India-based pellet producers have diverted focus to the domestic market from exports due to better realisation. The absence of bids from China has forced Indian producers to adopt a “wait-and-watch” approach till further improvement in export prices.

Chinese domestic pellet production has become more competitive, with local producers able to adjust pellet specifications according to steel mills’ requirements. Meanwhile, pellet inventories at Chinese ports are still high.

An eastern Indian pellet trader observed, “The market is keeping a close eye on the US Federal Reserve meeting.”

Rationale

• No pellet export deal was recorded this week, and therefore, this category was not taken into consideration for the price calculation. Hence, T1 trade was 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 a 100% weightage.

Factors impacting pellet exports

• Iron ore fines prices remain stable w-o-w: The benchmark iron ore fines index remained stable w-o-w at $92/t CFR China on 17 September following weak market fundamentals and slow trading activity due to the ongoing Mid-Autumn Festival holidays. With fewer market participants engaging in transactions, there was limited demand, which, coupled with the absence of any significant economic stimulus from recent government meetings, exerted pressure on prices.
• DCE futures drop w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for the January 2025 contract fell RMB 19/t ($3/t) w-o-w to RMB 675/t ($95/t) on 18 September.
• Portside pellet prices in China improve w-o-w: Chinese sources said that Qingdao’s portside offers for Indian pellets (Fe 63.5%) improved by RMB 16/t ($2/t) w-o-w to RMB 831/t ($117/t) on 18 September, inclusive of all import taxes and port charges.
• Pellet inventories at Chinese ports largely stable w-o-w: Pellet inventories at China’s major ports decreased slightly by 0.05 mnt to 5.3 mnt on 12 September 2024 compared to last week, according to SteelHome data.

Outlook

Based on BigMint’s analysis, pellet export prices are expected to remain under pressure amid low Chinese margins and subdued steel demand. However, participants are more focused on the US Federal Reserve’s upcoming decision on interest rates later this week.