- Seaborne pellet prices head north
- Global iron ore fines prices exceed $100/t
- Export realisation gap narrows to $4-5/t
Pellet prices and sentiments in the seaborne market improved after the recent pellet export deals by Odisha-based pellet producers. The pellet prices remained northward and market participants are eyeing higher price levels for tenders floated. BigMint’s India pellet (Fe 63%, 3% Al) export index (FOB east coast) increased by $9/t w-o-w to $97/tonne (t) on 28 August 2024.
Pellet export prices improved sharply in recent deals. An eastern India-based pellet producer recently finalised an export deal for 75,000 t of pellets (Fe63%, 8% SiO2+ Al2O3) at around $110.3/t CFR China for the September shipment, as per BigMint sources. Last week also they had sold around 75,000 t pellet export cargo at $110/t CFR China for September delivery.
An eastern Indian pellet producer said, “Recent rise in the seaborne market prices has boosted the market confidence and Odisha-based sellers are expecting around $115-120/t CFR China for the pellet in the near term which can lead to more pellet export deals from India.”
A trader said, “We can’t say anything about the near-term market sentiments as Chinese mills’ steel sales are under pressure. The demand from China was not great for the pellet amid cost effectiveness and port inventory, which is at moderate level.
As per sources, the pellet demand may rise in the coming days following the restocking activity of Chinese mills ahead of the National holiday to be started in the first week of October 2024. It’s quite early to comment about holiday restocking but deals from India are likely to be on positive side.
Rationale:
- One (1) pellet export deal was recorded in the last one week and was taken under price calculations. Hence these were accorded 50% weightage in the index calculation Click here for detailed methodology.
- Ten (10) indicative prices were received and nine (9) were considered for calculation of the index and given a 50% weightage.
Factors impacting pellet exports
- Iron ore fines prices up w-o-w: The benchmark iron ore fines index increased by $6/t w-o-w to $101/t CFR China on 27 August. Prices rose following positive macroeconomic factors, particularly the expectation of lower U.S. interest rates. Additionally, the market’s focus is on factors such as steel mill margins, the peak steel demand season, and low inventory levels for finished steel for a near-term recovery in both steel and iron ore prices.
- DCE futures up w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for the January 2025 contract increased by RMB 12.5/t ($2/t) w-o-w to RMB 754.5/t ($105/t) on 28 August. On a d-o-d basis, futures prices remained largely stable against RMB 758/t ($106/t) yesterday.
- Portside pellet prices in China stable w-o-w: Chinese sources said that Qingdao portside offers for Indian pellets (Fe 63.5%) inched up by RMB 5/t w-o-w to RMB 885/t ($124/t) on 28 August, inclusive of all import taxes and port charges. Meanwhile, prices recorded stable d-o-d.
- Pellet inventories at Chinese ports up w-o-w: Pellet inventories at China’s major ports increased by 0.35 mnt to 5.6 mnt on 22 August, 2024 compared to last week, according to SteelHome data.
Outlook
As per BigMint analysis, pellet prices and demand are expected to remain volatile in the seaborne market amid fluctuations in global fines prices. Pellet demand by the Chinese mills will depend on domestic steel sales in China along with favourable import margins by the mills.
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