- Buyers side-lined amid poor fundamentals
- No deals recorded from India
- Mills complete restocking ahead of Lunar holidays
BigMint’s India pellet (Fe 63%, 3% Al) export (FOB east coast) index remained stable w-o-w at $122/tonne (t) on 31 January 2024 amid rising global iron ore prices. No deals were recorded from the east coast of India in this publishing window amid the absence of decent inquiries from buyers.
As per sources, a south India-based pellet maker floated an export tender for 50,000 t of material (Fe 63%; Al2O3- less than 2%) today which is yet to be concluded due to poor bids from buyers.
Pellet offers in seaborne remained under pressure amid the lack of buyers. The fundamentals of the market were down and buyers were not interested in booking premium material as low demand was seen in the Chinese market.
A pellet maker in eastern India commented that the current pellet offers were not accepted by the buyers as they were looking for cheaper material. Few producers were busy loading previously booked cargo while some remained sidelined as buyers’ bids were not viable.
Another pellet producer said “The Chinese steel mills almost completed restocking ahead of the Lunar Holidays. We didn’t receive inquiries for raw pellets while domestic prices were also under pressure as the sponge and finished steel markets didn’t perform well. Some plants were preparing for maintenance shutdown or production cuts amid lower margins due to low demand. Some participants expected demand to increase for March laycan cargo but it didn’t go well.”
A trader informed that the current prices were only paper-based, while no deals or offers were available in pellet exports.
On the other hand, a few Chinese sources said that portside offers in China for Indian pellets (Fe 63.5%) have also decreased by around RMB 20/t ($3/t) w-o-w. Today’s offers were recorded at around RMB 1,150/t at ($161/t) Qingdao inclusive of all import taxes and port charges.
In the China market, major mills almost completed restocking of material before the Lunar Holidays while some last minutes bookings were seen for iron ore fines. However, finished steel commodities such as HRC demand remained under pressure which weighed on profit margin. Due to this, the steelmakers and traders avoided booking premium material — such as Indian pellets — amid non-feasibility at current offers.
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.
- Ten (10) indicative prices were received, and six (6) were considered for calculation of the index, and given a 100% weightage.
India’s weekly pellet exports
India’s pellet export shipments stood at 470,145 t in the fourth week of January compared to 386,550 t in the third week, as per vessel line-up data maintained with SteelMint.
Market highlights:
- Domestic realisations higher than exports: Domestic pellet (Fe 63%) prices remained stable w-o-w at INR 8,850/t ($106/t) exw in Barbil, eastern India. On the other hand, BigMint’s pellet export ex-plant price realisation for Barbil was also stable at INR 8,350/t ($100/t) exw this week. The domestic realisation remained INR 500/t ($6/t) higher against export offers.
- Global iron ore prices rise w-o-w: The benchmark Fe62% fines index increased by $3/t w-o-w to $132/t CFR China on 30 January. The recent hike in prices happened amid strong purchasing demand for post-holiday cargo. Steel mills increased iron ore re-stocking frequency but lowered the volume. However, China portside prices rose due to good fundamentals, after the People’s Bank of China reduced banks reserve requirement ratio by 50 basis points.
- DCE iron ore futures fall w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for May 2024 contract sharply decreased by RMB 18.5/t ($3/t) to RMB 960.5/t ($135/t) on 31 January compared to 979/t ($138/t) a week before. On a d-o-d basis, prices fell by RMB 19 ($3/t) as against RMB 979.5/t ($136/t) yesterday.
- Pellet port inventories in China inch up: Pellet inventories at China’s major ports increased by 0.3 mnt to 6.2 mnt on 25 January compared to 18 January. Notably, this is the peak level of the inventory in the last six months; previously it was seen in the first half of July 2023.
Outlook:
As per BigMint analysis, pellet offers may remain under pressure amid lower demand in the seaborne market. Buyers expect to book material cheaper from India compared to the current higher offers.