India: Pellet export prices fall by $7/t as deals dry up

The Indian pellet export market remained less-than-active for yet another week, with SteelMint’s pellet export index (Fe 64%, 3% Al, FoB east coast) recording a decline of around $7/t w-o-w. The index currently stands at $223/t.

In conversation with SteelMint, a trader source said that the price gap has widened between high-grade (low alumina) pellet and standard grade (high alumina) pellet amid curbs on sintering in China.

Not many offers by Indian players were heard this week, considering the volatility in Chinese steel futures as well as the fact that many exporters remain fully booked till Jul’21.

As per a recent report, steel cuts in Tangshan could be relaxed but sintering restrictions are likely to remain in place in Jul. Relaxation in blast furnace operations may stimulate pellet and lump use by Chinese steel mills.

Domestic iron ore prices in Odisha continued to edge up. Major Odisha-based merchant iron ore miner Essel Mining increased iron ore fines offers today. Current offers for fines (Fe 62%) stand at INR 9,600/t (ex-mines, including royalty, DMF and NMET), SteelMint learnt from sources.

Rationale:

• No export deal was concluded in this publishing window and hence calculation as T1 weightage kept at 0% in this index.
• SteelMint has received seven (07) indicative prices, offers and all were considered as T2 trades and given a weightage of 100% in this index.

Key market highlights-

• Spot iron ore prices stable w-o-w – The spot price of iron ore rebounded on 22 Jun to $212.7/t, CFR China. On a daily basis, prices increased around $6/t. DCE iron ore futures Sep’21 contract rose today to RMB 1,173/t ($181) d-o-d.
• Declining inventories at Chinese ports – Total pellet inventory at major Chinese ports decreased to 3.5 mn t last week, as per data maintained by SteelHome. The inventory is at its lowest level since SteelMint began maintaining data in Jul’20.

• Freight rates increase  – Freight rates for 50,000-55,000 t export vessels from India’s east coast (Paradip) to China rose up by $3/t to $26-27/t against rates that prevailed last week.
• Domestic pellet prices fall marginally on declining sponge prices-SteelMint’s bi-weekly domestic pellet index, PELLEX, stands at INR 16,000/t, DAP Raipur, down by INR 200/t against the previous assessment on 21 Jun. Pellet prices in eastern and southern India have fallen further by INR 100-500/t yesterday.