SteelMint’s India pellet (Fe 63%, 3% Al) export index (FOB east coast) stands at $155.5/t, up by $2.5/t w-o-w. Chinese buying interest has not remained aggressive. However, buying inquiries from the EU have increased significantly post-ongoing trade tensions.
Rationale
- No deal was reported so far this week, hence, not taken into price calculation under T1 trade and given no weightage in index calculation, Click here for methodology.
- Eight (08) indicative offers and bids were received, and all were considered for calculation of the index, given 100% weightage.
Buying price indications from China are still hovering around $180-185/t CFR levels.
However, Indian producers are seeing a sudden spurt in enquiries for prompt pellet cargoes. Most of the enquiries are emerging from European buyers and they are mainly eying March shipments.
“Enquiries have shown a marked increase from Europe although not many of these have been converted into deals and are still under discussions considering the specifications. However, a few vessels were heard diverted to EU which were booked for some other destinations earlier,” informed a market source.
A few eastern India-based players had issued export tenders this week, but didn’t hear them getting concluded. Southern India-based KIOCL is likely to open a pellet export tender this week, which might give a better clarity on prices, highlighted a trading source.
Why have inquiries picked up for Indian pellet cargoes?
- Ukraine’s Ferrexpo declares force majeure on iron ore pellet exports: The world’s third-largest pellet producer and exporter, Ferrexpo, has issued a force majeure notice to certain customers that were due to receive products via ocean-going vessels in the near term. Export activities at the port in southwest Ukraine, where the berth is located for shipping pellets to customers, remain temporarily suspended. Ferrexpo produced 11.2 mnt of pellets in CY’21.
- Russia-Ukraine trade tensions impacting supplies to EU: Both Russia and Ukraine supplied a substantial volume of pellets to the European Union (EU). In fact, data maintained with SteelMint reveals that both nations combined had more than a 29-mnt exports exposure. Ukraine supplied a substantial 16.03 mnt of pellets and concentrate in 2021, up nearly 4% against 15.44 mnt in 2020. Russia’s pellet and concentrate exports, however, showed a 10% drop to 13.39 mnt last calendar against 14.88 mnt in the preceding year.
Market highlights
- Domestic pellet trade stable w-o-w: As per SteelMint analysis, domestic pellet (Fe 64%, 3% Al) ex-plant realization is assessed at INR 10,400-10,500/t for Barbil, eastern India. On the other hand, SteelMint’s domestic price assessment for the Barbil region remains stable at INR 11,500/t ($152) loaded to wagon. Thus, the price gap between the two has narrowed down with a recovery in global prices.
- Global iron ore prices increase w-o-w: The benchmark Fe 62% fines index increase by $7.7/t on 1 Mar’22 to $144.45/t CFR China. Seaborne iron ore price continued its bull run in the week despite continued weak seaborne liquidity in the market. Buying interest in the seaborne market continued to remain lacklustre while secondary offers in the market were ample. NDRC, along with division of pricing competition monitoring under the general bureau of market survelliance, visited DCE to check on the sharp volatility in iron ore prices.
- DCE iron ore futures increase w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for May contract closed today (at 3 PM) at RMB 755/t, up RMB 17.5/t ($3/t) d-o-d. On a weekly basis, it is moved up by around RMB 55/t ($9/t).
- Port inventories in China inch down w-o-w: Pellet inventory at China’s major ports was recorded at 4.5 mnt this week as against 4.6 mnt a week ago.
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