Less viability in exports amid thin realizations, dull domestic demand and cheaper imported lump offers to India continues to keep pellet prices under pressure.
Domestic pellet prices in India have declined further this week and corrected up to INR 300/MT W-o-W. Few of the major east India based pellet makers are holding offers. Prime reasons owing to which Indian pellet prices have come under pressure are as follows:
1. Less viability in exports over price decline in global market – Amid sharp decline in iron ore and steel prices in China, pellet export offers from India have also fallen this month. Also pellet premium for Fe 65% grade has come down to USD 14.5/DMT, CFR China. Trade sources highlighted that presently export offers should be around USD 72-73/MT, FoB India however looking at present volatility in Chinese market, Indian pellet exporters have restricted from finalizing export deals. India exported 0.75 MnT pellets in Mar’17 which has reduced to 0.34 MnT in Apr’17 (till 21 Apr’17).
2. Declining offers of imported South African lump – Falling global iron ore prices has made imported lump offers to India cost effective pressurizing west India pellet offers. Also lump premium has narrowed down to USD 0.0215/DMT, CFR China. Offers for imported South African lump is heard to be around USD 69-70/MT, CFR India. According to market sources, an import vessel carrying imported lump from South Africa will arrive at Kandla port in mid May’17.
3. Reduced buying interest in domestic market – Market participants in eastern and central India shared that amid limited trade activities and fall in sponge prices, pellet buying interest in domestic market has turned weak.
Central India based pellet makers are expecting further fall in prices in the near term. Presently in Raipur pellet offers are at INR 4,900-5,000/MT while buying interest remains at INR 100-200/MT less than present offers. Also as per market sources, an Odisha based pellet maker has offered pellets to Raipur at INR 4,900/MT (landed to Raipur) which is competitive to the present offers prevailing in Raipur. This might further pull down domestic pellet offers in Raipur.
Indian Pellet Prices as on 25 Apr’17
|
City |
Grade (Fe %) | Basic Prices in INR/MT |
W-o-W |
| Keonjhar* | 63 | 4,300 | -200 |
| Jharsuguda | 63 | 5,000 | -300 |
| Durgapur | 63 | 5,000-5,200 | -100 |
| Raipur | 63 | 4,900-5,000 | -100 |
| Bellary | 63 | 6,300-6,400 | -100 |
| Kandla** | 63 | 5,400 | -300 |
*loaded to wagons
**delivered
Source: SteelMint Research
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