Due to higher global iron ore price- Indian pellet manufacturers cannot materialize pellet export deals upon higher bid expectations.
Indian pellet exports are gaining momentum since FY17. Rising Chinese demand and better realization in exports have made Indian pellet exporters to go for exports.
Recently, few pellet export tenders were held. An east India based pellet manufacturer received bid (for Fe 64%) around USD 103-104/MT, CFR China; according to sources.
Due to higher global iron ore prices which recently touched to the level of USD 90/MT, CFR China, the pellet exporter expects prices around USD 110-111/MT, CFR China and in negotiation. However, it is yet to be confirmed.
Last tender for around 50,000 MT Fe 64% grade pellets closed in the month of January at USD 99/MT, CFR China.
In current market scenario, supply of Indian pellets has witnessed a remarkable increase towards China. Chinese buyers are looking for Indian material either pellets or iron ore at discounted rates. Prime reason behind this is Indian material contains high alumina content (around 2.6%) which requires higher coal consumption.
Steel Mint assessment for Fe 64.5-65% pellet exports is around USD 102-103/MT, FOB India for Mar’17 shipments. Vessel freight from India will be around USD 8-9/MT.
Notably, pellet premium for Fe 65% BF grade pellets have moved down to USD 21.5/MT which used to be at the level of USD 31/MT.
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