SteelMint’s India pellet export index (Fe 64%, 3% Al, FOB east coast) declined $16/t, w-o-w, to $100/t. These price levels were last witnessed towards end-Jul’20. Indian pellet export bookings continued to remain on the lower side amid lack of viability in the export market for Indian producers.
“Indian pellet export price indications for standard grade (Fe 64%, 3% Al) are heard at around $125/t CNF China. However, no deals have been heard concluded,” shared a trader.
“Due to resumption after mid-autumn holidays, the market witnessed a slight change. Heard there will be renewed demand for pellets. However, no deals were heard and also we expect the market dynamics to change after the Golden week holidays”, another trader source told SteelMint.
A few market sources shared that the current pellet export offers are not viable, considering the lower export realizations . However, it has been heard that demand for pellets at China’s ports is still decent as high coke prices are supporting the preference for pellets over lump ore. High coke prices in China may create an upside for low-alumina pellets in the market, as pellets are an alternative to iron ore lumps.
In China, the surge in coking coal costs has appeared to have worsened, with the raw material making up between 50%-70% of the input cost to produce hot metal. It was heard that steel mills’ estimated cost of coking coal has increased to about 70% of the total raw material input costs since May even as iron ore prices have slumped.
“We have firm bids for low Al pellets at above $150/t CFR China after the Fe 62% fines index recovered by $14/t today to $108/t CFR China,” an Indian pellet producer informed.
As per data maintained with SteelMint, total pellet exports from Indian ports for the week (12-18 Sep’21) were recorded at 126,760 t as against 129,000 t a week ago.
Rationale:
- No deals were heard concluded for China in the current publishing window. Hence, the weightage given was 0%.
- Eight (08) indicative offers and bids were received, and six were considered for calculation of the index, given a weightage of 100%.
Market highlights
- Spot iron ore prices down $6/t, w-o-w: The spot price of iron ore benchmark Fe 62% fines fell by $5.85/t on 22 Sep to $107.55/t CFR China as against $113.40/t assessed a week ago. Dalian iron ore futures picked up 6.3% on 22 Sep, with resumption of market activities as the mid-Autumn holidays ended in China. DCE iron ore futures Jan’22 contract closed at RMB 668.5/t ($103) (+RMB 39.5).
- Domestic pellet prices stable, w-o-w: SteelMint’s bi-weekly domestic pellet (Fe 63%) index, PELLEX, remains stable at INR 11,100/t DAP Raipur on 21 Sep. A few central India-based players are evaluating options about booking South African iron ore lumps cargoes as global iron ore prices have fallen drastically. With the decline in global iron ore prices, iron ore lump import offers from South Africa have decreased resulting in some bookings by Indian mills recently.
- KIOCL under maintenance shutdown: KIOCL has undertaken temporary shutdown of its pellet plant from 20 Sep for rectification of the indurating machine alignment, major repairs and other maintenance works. The plant is expected to resume operations after six weeks. KIOCL has a 3.5 mn t/year pellet plant at Mangalore in Karnataka which produced 2.21 mn t of pellets in FY’21.
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