India: Pellet export shipments drop 23% y-o-y in CY’21 on lower Chinese buying

India’s pellet export shipments were recorded at 10.31 million tonnes (mn t) in CY’21, as per data maintained with SteelMint. The shipments fell by 23% y-o-y compared to 13.34 mn t in CY’20.

Pellet exports to China decline 37% y-o-y: China continued to remain the largest importer of Indian pellets in CY’21 at 7 mn t. However, the volumes were down by 37% y-o-y as against 11.1 mn t in CY’20. Indonesia stood as the second-largest importer at 0.78 mn t in CY’21 followed by South Korea at 0.63 mn t.

Shipper-wise exporters in CY’21: BRPL was the largest pellet exporter in CY’21 at 2.11 mn t, down against 2.69 mn t in the previous year. Rashmi Metaliks stood as the second-largest exporter at 1.82 mn t followed by Southern India-based KIOCL at 1.7 mn t in CY’21.

Factors behind drop in export volumes – 

• Limited Chinese buying: The decline in export shipments was largely due to lower Chinese buying on steel production cuts. In CY’21, the Ministry of Industry and Information Technology mandated that China’s crude steel output cannot exceed the CY’20 level, indicating this as necessary to reduce emissions and balance domestic steel supply-demand. In the first 11 months, China’s crude steel output already fell by 2.4% y-o-y at 945 mn t.
• Bid offer disparities: Indian pellet export prices fell sharply tracking the plunge in global iron ore fines prices. SteelMint’s index for Indian pellet (Fe 64%, 3% Al) export fell sharply to $100/t FoB in Sept’21 from around $245/t FoB east coast in Jul’21. On the other hand, SteelMint’s domestic index PELLEX fell to INR 9,500/t ($128/t) levels in early Dec’21 from INR 17,300/t ($233/t) DAP Raipur in May’21. Thus, lower ex-plant realisations in exports have limited bookings. As a result, Indian pellet players diverted their volumes to the domestic market.

Outlook

India’s pellet export index rose to 2-month high in end-Dec’21 following which active deals in exports were reported. This may keep Jan’22 shipments supported.

It may be noted that India’s pellet capacity is in excess of 111 mn t per annum. Total production in CY’20 was more than 65 mn t.