Indian pellet export index rises by $5/t as Tangshan announces new round of environmental checks

• Confirmed deals of over 300,000 t pellets from India were recorded by SteelMint so far this week
• China’s Tangshan announced new round of restrictions on domestic steel industry to curb air pollution
• Freight rates from eastern India to China increase further by $1-2 w-o-w

SteelMint’s weekly pellet export index (FOB east coast India) for Fe 64% grade has increased by $5/t w-o-w to $185/t. Indian pellet makers have continued to remain active in concluding export deals post Chinese CNY holidays. Confirmed Indian pellet export trades of around 300,000 t were recorded by SteelMint so far this week. Pellet makers located in Odisha, West Bengal, Karnataka and Rajasthan have concluded export deals this week.

Southern India based pellet maker – KIOCL has concluded an export deal for 55,000 t pellets (Fe 64% and 2% Al) yesterday via tender process. The deal was heard to be concluded at $192/t FoB, which is up by $2 against its bid price of Feb export deal.

“Market sentiments in Chinese market is currently looking very strong owing to new round of restrictions imposed on blast furnace and sintering plants effective during 2-5th Mar’21. This is the additional restriction put on Tangshan province apart from the one announced on 23rd Feb’21. It is also expected that further actions will be imposed on steelmakers if the air quality levels doesn’t improve”. shared a participant from eastern India based pellet making company.

Indian pellet export  deals-:

Rationale: Total six pellet export deals were concluded in this publishing window. Out of the total, only two were taken into consideration for price calculation as T1 inputs and given a weightage of 50%. Rest of the deal were excluded because they are likely to be shipped other than eastern India based ports.

Apart from trades, SteelMint has also received six (6) indicative prices, offers and bids (T2) out of which two offers were excluded. T2 trades were given a weightage of 50%.

• Spot iron ore fines price increases by $3/t- Spot iron ore fines Fe 62% price increased $3/t w-o-w. The prices witnessed at $175.5/t yesterday as against $ 174.3/t last week. On d-o-d basis prices were increased by $1.2/t against a day before yesterday.
• Freight rates increase further – Freight rates for 50,000-55,000t export vessels from east coast India (Paradip) to China have increased once again this week by $2 w-o-w to $23-24/t.
• Pellet inventories at Chinese ports decline – Pellet inventory at major Chinese ports have decreased to 6 mn t last week against 6.2 mn t a week before as per data maintained by SteelHome. However on a monthly basis, inventories have picked up by 0.35 mn t against 5.65 mn t a month before.
• Gap between realization in export and domestic widens – Most of the eastern India based pellet maker are trying to capitalize in exports as ex-plant realization is higher than the domestic market. Pellet export realization is higher by around INR 700-1,100/t (around $10-15/t), as per SteelMint’s analysis. SteelMint’s pellet price assessment from Barbil (Odisha) stands at around 11,000/t ($151/t, loaded to wagon) this week.

Outlook: Market sources expect only few players to be active in the domestic pellet market in April, considering active export bookings made in Feb and Mar’21.