India: Pellet exports resume after withdrawal of export duty

India’s pellet export trade activities have improved following the export duty withdrawal by the Indian government last week. SteelMint’s India pellet (Fe 63%, 3% Al) export index, FOB east coast, stood at $101/t on 23 Nov’22. Trade activities have picked up post removal of 45% export duty announced last week by the Indian govt. 

Rationale

• One deal was reported this week and hence was taken for price calculation under T1 trade and given 50% weightage in index calculation. Click here for methodology.
• Five (5) indicative offers and bids were received out of which four (4) were considered for calculation of the index and given 50% weightage.

The government has announced a significant revision in export duties on steel and steelmaking raw materials on 18 Nov’22. The 45% export duty on pellets has been reduced to nil. Pellets exports from India during January-October dropped 32% to 6.6 mnt from 9.75 mnt in the same period last calendar year.

The market witnessed limited trades this week. An eastern India-based pellet producer concluded an export deal for 55,000-75,000 t of pellets (62-63% Fe, 3% Al). The deal was heard concluded at $110-112/t CFR China for December shipment, sources confirmed.

Another couple of suppliers from eastern India were seen offering pellets for export, but deals are yet to be concluded.

Market highlights

• Domestic pellet realisations higher than exports: As per SteelMint analysis, domestic pellet (Fe 63%, 3% Al) offers are at INR 8,000/t ($98/t) loaded on to wagon for Barbil, eastern India. On the other hand, SteelMint’s pellet export price on ex-plant basis for the Barbil region is assessed at  INR 6,400-6,500/t. Removal of export duties may benefit the merchant pellet players who were largely dependant on exports.
• Global iron ore price down on rising Covid-19 cases: The benchmark Fe 62% fines index decreased by $1.5/t w-o-w on 15 Nov to $94.2/t CFR China. Seaborne buying was restricted due to poor import margins. Portside trading activity was weak as China COVID-19 cases rise. 
• DCE iron ore futures up d-o-d: Iron ore futures on the Dalian Commodity Exchange (DCE) for January contract closed on 23 November, 2022 (at 3 pm) at RMB 732.5/t, up RMB 7.5/t ($1/t) as against RMB 725/t on 22 May, 2022. However, on a weekly basis, prices inched down by around RMB 1.5/t.
• Port inventories in China stable w-o-w: Pellet inventory at China’s major ports stood at 5.7 mnt this week largely stable against last week.