Indian Pellet Exports Surge 68% on Strong Chinese Demand

According to the customs data maintained with SteelMint, Indian pellet exports have seen a marked rise of 68% Y-o-Y to 9.68 MnT as against 5.79 MnT in CY’16.

Why Indian Pellet Exports Jumped Sharply ?

1. Reduced supplies post-Samarco disruption – Chinese buyers shifted pellet demand to Indian cargoes post-Samarco disruption(Brazil).It is to be noted that the pellet production from Samarco was 12.05 MnT and 12.31 MnT in 2014 and 2015 respectively. After the dam collapsed towards the end of 2015, supplies were interrupted which gave Indian exporters a chance to cater to the market.

2. Chinese demand for high-grade material – In 2017 pellet demand spurred in China owing to government regulations to make use of high-grade raw material like pellets and lump to curb pollution.

3. High pellet premium supported exports – Pellet export from India was witnessed a huge uptrend owing to the high export realization over increased spot pellet premium. Towards the end of Sept’17, spot pellet premium increased to USD 50/DMT, CFR China which further increased to USD 59/DMT, CFR China in early Nov’17.

JSPL continue to remain the largest Indian pellet exporterJSPL stood the largest exporter for the duration of CY’17 with exports at 1.98 MnT, accounting for 20%share in total pellet exports from India.

Shipper-wise Iron ore Export in 2017-:

Qty in MnT
Source: SteelMint Stats

What may happen in 2018?

The steel production cuts in the winter season, are now been extended for another eight months. Amidst stricter environmental norms in China, mills are expected to prefer high-grade ore (pellets) as feedstock as a cost-effective means for production. As Samarco pellet offering has expected to resume later at the end of 2018, therefore, Chinese demand for pellet remains stronger from India.