SteelMint: India pellet export index falls on declining global iron ore prices

A steep fall in spot iron ore prices in China amidst the decline in futures prices have pushed Indian pellet export prices lower. SteelMint’s India pellet (Fe 63%, 3% Al) export index (FOB east coast) stands at $156/t.

Some sources informed that an eastern India-based player concluded an export tender at a premium of $38-40/t recently. However, the news could not be confirmed till the time of publishing this index.

Rationale

• One deal was reported this week so far but not taken into price calculation as it was not confirmed either by the buyer or seller under T1 trade. Hence, given no weightage in index calculation  Click here for methodology.
• Six (06) indicative offers and bids were received, and four (04) were considered for calculation of the index, given 100% weightage.“The market is silent. With the spot iron ore index falling sharply yesterday, there are no firm offers from India currently”, highlighted a trader source.

Futures plunge as NDRC steps in to check speculation – Iron ore futures on the DCE for May contract closed today at RMB 720/t, up RMB 21/t ($3) d-o-d. However, its still down by around RMB 60/t ($9) w-o-w. The futures market remained supported due to speculative demand and China’s state planner NDRC will hold a meeting with various stakeholders in the iron ore industry on 17 Feb to discuss measures to crack down on speculation to control soaring prices.

Notably, iron ore spot prices touched $150/t levels in early Feb as against $90/t levels in Nov. Raw material prices in China are expected to rise further as the country’s steel production is expected to gather pace post the Winter Olympics.

Spot prices in China drop $13/t – The benchmark Fe 62% fines index slipped $13.2/t on 15 Feb to $136.2/t CFR China. Seaborne iron ore prices plunged as the looming policy uncertainty in China has turned buyers cautious.

Port inventories in China increase w-o-w – Pellet inventory at China’s major ports was recorded at 4.35 mnt this week as against 4.05 mnt a week ago.

Domestic pellet trades slow down– On the other hand, pellet prices in India decreased on weak demand and steel mills were not active in procurement with both traders and mills cautious, holding a wait-and-watch stance, sources said. This was due to the decline in sponge iron prices seen since closing of last week. SteelMint’s assessment for pellet prices in the Barbil region of Odisha stood at INR 11,400-11,500/t ($152-153) loaded on to wagon.