Indian pellet export index increases by $6/t on limited offers & fines price hike

SteelMint’s pellet export index (FoB east coast India) has increased by $6/t on a weekly basis and stands at $132/t on 11th Nov’20. Pellet export index has increased following hike in spot iron ore fines price in China and falling pellet inventories at Chinese ports. There were hardly any export offers heard from India amid better realization in the domestic market, traders highlighted.

Availability of high grade iron ore continues to remain tight in Odisha resulting in hike in offers.

Rationale: No pellet export deal (T1) heard so far in this week and not considered for calculation of index. Therefore, weightage of T1 transferred to calculation of T2 inputs. Last week, an Indian pellet maker concluded an export tender for 50,000 t pellets (Fe 64% and 2% Al) at around $135.5/DMT FoB India. The material is likely to be shipped to non-Chinese destination.

SteelMint has received only two indicative prices (T2) and they were taken into consideration with an average price of $132/t FOB India.

Spot iron ore fines price up by $7 w-o-w- Chinese spot iron ore fines (Fe 62%) increased by around $7/t on weekly basis and stood at $ 124.9/t CFR China today against $117.65/t a week before. However, on a daily basis also, the price has increased up by $1.6/t today against $123.3/t CFR yesterday.

• Pellet inventories in Chinese ports fall – Pellet inventory at major Chinese ports has decreased further last week by around 0.35 mn t to 9.9 mn t as per Steelhome data. Chinese steel mills are keep buying pellets from port side inventory in the last few weeks. Recent sintering cuts may further support pellet demand.
• Sharp hike in domestic pellet price- Major pellet makers from Barbil increased offers in the domestic market this week. SteelMint’s pellet price assessment from Barbil (Odisha) stands at INR 9,000-9,200/t (Loaded to wagon) this week, up by INR 500/t w-o-w.
• Odisha based merchant miners like Rungta & Essel Mining have further raised iron ore offers this week. Essel Mining has announced hike in iron ore fines price by INR 500/t and lumps INR 700/t, trade sources have reported SteelMint. Revised offers for Fe 62% fines from Koira stands at INR 4,575/t ex-mines, including Royalty, DMF & NMET.
• Higher realizations in domestic market – Pellet export is fetching realization lower by INR 700-800/t (around $9-10/t) than prevailing domestic offers , as per SteelMint’s analysis.