Indian pellet export index remains range-bound on inactive market

SteelMint’s pellet export index (FOB east coast India) remained largely stable this week. Index stood at $136/t on 25th Nov’20. Indian pellet makers have not been offering material for exports since past few weeks, considering higher realizations in domestic market.

Chinese steel mills are heard to be preferring lump over pellets considering its cost-effectiveness over pellets, shared a trader with SteelMint.

However Indian pellet makers remained less interested in quoting offers for exports. “I didn’t hear any firm export offers from India but considering limited offers Chinese buyers may agree to pay a premium”, highlighted an Indian pellet maker.

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.

SteelMint has received four indicative prices (T2) and only three were taken into consideration with an average price of $136/t FOB India. Vessel freight rates from India to China has increased to around $11/t this week against $10/t last week.

• Spot iron ore fines price up by $2 w-o-w- Chinese spot iron ore fines (Fe 62%) increased by around $2/t on weekly basis and stood at $ 128.15/t CFR China yesterday against $126/t a week before.
• Pellet inventories in Chinese ports fall – Pellet inventory at major Chinese ports have been decreasing from the last couple of weeks. Last week, inventories fell by around 0.6 mn t to 8.5 mn t as per data maintained by Steelhome.
• Indian domestic pellet prices softened – Indicative prices from Barbil slightly decreased in the domestic market this week amid fall in sponge and billet prices. SteelMint’s pellet price assessment from Barbil (Odisha) stands at INR 10,300-10,500/t (Loaded to wagon) this week.
• Serajuddin was reported to sold around 500,000 t of high-grade iron ore fines signaling some ease in availability issues. However, SteelMint learnt that the company is unlikely to offer significant quantities in the coming months.
• Realization in domestic still higher than exports – Pellet export is fetching realization lower by INR 1,700-1,750/t (around $22-23/t) than prevailing domestic offers, as per SteelMint’s analysis. There seems to be a large gap between the domestic and export of pellet ex-plant realization. Hence, pellet makers are largely focusing in the domestic market.