Indian Pellet Exports May Cross 8 MnT in 2017 on Strong Chinese Demand

India boasts of a large pellet production and is one of the major suppliers of the material to world’s largest consumer China.

China the largest iron ore importer of the world has imported 0.59 MnT pellets in Jun’17 according to the trade data released by Chinese Customs.

In Jun’17, India exported 0.27 MnT pellets to China and continues to remain the largest exporter of pellets to China. India is actively exporting high-grade pellets to China in order to fulfill its pellet appetite.

SteelMint tried to analyze the current market situation through the numbers available with us that suggests the 8.5 MnT yearly export of pellet from India in 2017. The suspended Samarco output to higher realizations for Indian exporters  are some of the reasons that will help it happen.

1. Absence of Brazilian Pellets
The Brazilian miner Samarco has produced 12.05 and 12.31 MnT pellets in the years 2014 and 2015 respectively.

It’s been more than a year now when the serious environmental accident took place in Brazil, the Gualaxo do Norte River in the south-eastern state of Minas Gerais, still show the effects of the same. The accident killed 19 people and resulted in Brazil’s worst environmental disaster, with toxic mud polluting rivers and flowing hundreds of miles to the Atlantic Ocean.

The company halted operations in November 2015 after accident; there are reports that discussions are going on with the government to get the due environmental licenses. Roberto de Carvalho, CEO had announced earlier that, “to start the operations this year will be challenging, though there remains a small possibility.”

“It is becoming increasingly difficult to start operations this year,” Carvalho explained. Every passing day is making it worse, he said according to the reports. The debt ridden company is struggling to renew its contract with creditor due the production halt, reports say. “We have been in talks with banks and bondholders, but the basic condition is that the company resumes operations,” said Carvalho.

2. High Pellet Premium
The global pellet premium rose to USD 35.9/MT, CFR China, a jump of 10% W-o-W is being connected to the momentum in the Indian export deals that are completed recently.

3. Demand for High Grade Cargo in China
Indian pellet have always been preferred by Chinese millers. The demand for higher grade material, due to an increased coking coal prices have been pushing the alternative material requirement in China recently. Coking coal prices have increased further this week by USD 5/MT and are assessed at USD 208.5/MT FoB Australia for Premium HCC.

It is believed that to curb the pollution a considerable cut in the use of Sinter, along with minimized feed of low grade ore is noticed in China and made a way for the transition to high grade lump and pellets by Chinese steel mills.

4. Better export realizations for Indian Manufacturers
SteelMint research suggests that a manufacturer from South India is heard to have floated a tender for the quantity of 50,000 MT and is in the process of finalizing a deal for September shipment between USD 114-115/MT, CFR China.

A week ago, JSPL had concluded a deal with USD 111.5/MT, CFR China and is also in agreement that the current prices are trending at quite higher levels with good number of inquiries at hand.

Indian pellet exports have grown by 88% Y-o-Y for FY18 till Jul with 2.3 MnT pellets against 1.22 MnT exports for the same period last year. The exports were up 70% for the month of Jul with the quantity of 0.66 MnT compared to the quantity of 0.39 MnT in Jul’16.

There was an increase of 10% M-o-M in Jul exports compared the pellet exports in Jun’17 at 0.60 MnT.

As per the SteelMint analysis of the number for the current month, the pellet exports are expected to be up by at least 25-30% M-o-M.

5. Indian Pellet Export Trend in Previous Years
The quantity of 8.26 MnT exported in FY-17 was ten times higher than the quantity that was exported from India in FY-16.

The current numbers available with us read that between Jan-Jul-17 the country have already exported nearly 5 MnT pellets, if the current trend continues it will easily cross the amount of 8.5 MnT by December end this year.

The provisional data with us suggest that in Aug-17 India have exported around 0.93 MnT pellets which is 29% higher compared to Aug-17. The actual numbers may be slightly higher the sources reported.

Major Indian Pellet Exporters

*Data till July-2017
Exporters Data Rage-Apr-2013 To Jul-2017

Countries India Exports Pellet To 

Qty In MnT