The Indian pellet export market has gained some momentum after remaining silent for nearly two weeks. A couple of export deals, for 55,000 t each, were concluded by an eastern India-based pellet producer for Jul’21 and Aug shipments. SteelMint’s pellet export index (Fe 64%, 3% Al, FoB east coast) has recorded a rise of around $6/t w-o-w and currently stands at $229/t.
Steel mills in northern China have reduced production at blast furnaces for the week to ensure clean air ahead of the centenary celebrations of the founding of the Chinese Communist Party.
Some mills in northern China’s Shanxi province as well as the cities of Tangshan and Handan in Hebei province, have been required by local governments to suspend production at all of their blast furnaces from 29 Jun to 1 Jul, according to market sources.
Construction steel demand in China has declined as well, as the authorities have issued a diktat that construction sites in some areas of Shanxiand Hebei provinces suspend activities over a three-day period in a bid to reduce dust pollution. Market participants expect sintering cuts to bolster demand for pellets and iron ore lumps in the near term.
“Price indications for standard grade pellets are hovering at $250-255/t, CFR China. However, offers for low-Al pellets are heard at around $270/t, CFR China,” shared a trader source.
Rationale:
- Two export deals were concluded in this publishing window and one was considered for calculation as T1 trade and given a weightage of 50% in this index.
- SteelMint has received seven (07) indicative prices and offers and five were considered as T2 trades and given a weightage of 50% in this index.
Key market highlights-
- Spot iron ore prices up w-o-w – The spot price of iron ore fines Fe 62% increased to $214.1/t, CFR China,on29 Jun against $212.7/t, CFR China, a week ago. DCE iron ore futures recovered today by RMB 12/t d-o-d to close at RMB 1,165/t on 30 Jun.
- Pellet inventory up slightly on week at Chinese ports – Total pellet inventory at major Chinese ports roseby 0.1 mn t to 3.6 mn t last week, as per data maintained by SteelHome.
- Freight rates largely stable– Freight rates for 50,000-55,000 t export vessels from India’s east coast (Paradip) to China have remained largely unchanged at $25 against rates that prevailed last week.
- Domestic pellet prices fell marginally on declining sponge iron prices-SteelMint’s bi-weekly domestic pellet index, PELLEX, fell marginally to INR 15,900/t, DAP Raipur yesterday. The market continues to remain muted and trades have dried up on a steady decline in sponge iron prices amid subdued finished steel sales in the domestic market.
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