Southern India based pellet maker – KIOCL has concluded a deal for around 50,000 DMT pellets with 65% Fe content and less than 2% alumina. According to sources the deal was concluded at around USD 136-137/MT, FoB India. As per sources pellets were of high grade made out of imported concentrate. High grade Indian pellets (with lower alumina content) are becoming a great source of interest for overseas buyers.
Why are Indian pellet export prices increasing sharply ?
1. Supply constraints at LKAB: The price hike is due to limited pellet supply in global market over Swedish miner – LKAB (EU largest iron ore producer and 2nd largest producer in seaborne pellet market) declaring a force majeure. The fire broke out in Norwegian railways has resulted in temporary supply cut by the miner. As per reports, LKAB is world’s 2nd largest producer in seaborne pellet market producing 24.6 MnT in 2017.
Japan, European and Korean still mills have increased their dependence on Indian mills for pellet demand. Amidst hindrance from LKAB supplies, Indian and other Asian pellet prices are being supported.
2. China’s newly announced production cuts: China’s strict governmental laws and approaching winter heating cuts have led to rising demand for high grade ore and has resulted in increased dependence on Indian pellets. As per the proposal for emissions control during the winter heating season in China , cities of Tanjin, Shijiazhuang, Tangshan, Handan, Xingtai and Anyang are expected to cut their blast furnace steel output by 50% whereas at least at least 30% output is expected to be cut in 22 other cities in the region.
3. Hike in pellet premium – Spot pellet premium for Fe 65% grade pellets has increased sharply this week to USD 69.20/DMT, CFR China, up by USD 5.50/DMT W-o-W against 63.70/DMT a week before.
Last month KIOCL concluded three deals for 50,000 MT pellets each containing Fe 64% grade (less than 2% alumina). The deal was heard to have concluded at around USD 116-118/MT, FoB India for August shipment.
Another pellet export deal heard for regular grade pellets –
SteelMint heard from market sources that another deal was concluded for regular grade pellets (3% Alumina) at around USD 122/MT, FoB.
Indian pellet exports in CY18 –
According to customs data maintained with SteelMint, Indian pellet exports were recorded at 4.36 MnT during Jan-Jul’18. China remained the largest destination with share of nearly 71% followed by South Korea with a share of 6%. Other major countries were Vietnam, UK, Japan, UAE and others.
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