Indian pellet export prices have come down this week. Currently, Indian pellet export price down by 5% current assessment is USD105-106/MT, CFR China against USD 110/MT, CFR China a month back. On weekly basis, Pellet export prices have down by 1-2% against USD 107/MT, CFR China last week.
Reason for decline in pellet export offers-
1. Decline in Chinese iron ore fines index- China Iron ore price for Fe 62% fines has witnessed a decline from the last closing week. Benchmark index is assessed at USD 64/MT CFR, China Yesterday(23rd May’18) fall of 4% W-o-W. It closed at USD 67/MT CFR, China last week on Friday 18th May’18.
2. Preference of Chinese mills towards concentrate- Price of iron ore concentrate (Fe 66%) is around USD 90.85/MT, CFR China. The prices have remained stable in a month’s time.
3. Chinese mills going for Blending Process-: China production restrictions due to environmental regulations and the SCO summit going to held too in Qingdao has affected market sentiment. As buyers in China prefer to buy low alumina Brazilian iron ore (Carajas fines) resulted still mills are using the blended raw material or concentrate which has creating less pollution. Lower Index prices of Australia (Pilbara fines) supported the blending or concentrate process in China.
4. Hike in Freight rates amid increasing crude oil prices-As the international crude oil prices are going up significantly which has affected the freight rates. SteelMint has learned from the sources that, freight rate from India to China for Supramax vessels which was around USD 9.5/MT has increased to USD 10.5/MT. Thus FoB prices have come down to USD 94-95/MT.
Global crude oil prices remained at an elevated level today with global benchmark Brent crude trading near USD 79.65 a barrel against USD 60 at the beginning of Nov’17.
Increased inquiries for Indian Pellets from Europe-
SteelMint has also learned from market sources that a good number of inquiries is also coming from the European market for Indian pellets but as per the sources, freight for Europe from India is quite high around USD 20-21/MT and it’s not feasible for exports at current prices.
At IOC (Iron Ore Company of Canada), the revised guidance for 2018 production is 10.3 to 11.3 MnT of iron ore pellets and concentrates (previously 11.5 to 12.5 MnT). The local union workforce voted to strike and operations were suspended from that date.
This may turn European steelmakers to look for Indian pellets market to make up for the supply gap.
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