SteelMint: India’s pellet export index edges up on rising global iron ore prices

India’s pellet (Fe 63%, 3% Al) export index (FoB east coast) rose $13/t w-o-w to $165/t from $152/t on 30 Mar’22. The export market regained momentum following expectations that demand might resurface as domestic concentrate prices in China have started to climb. However, deals are yet to regain momentum.

Rationale

• One deal was reported so far this week for 30,000 t of pellet (Fe 63%, 3% Al) for end-Apr’22 shipment considered under T1 trade and hence the weightage given was 50%. Click here for methodology.
• Seven (07) indicative offers, and bids were received, and six (06) were considered for calculation of the index, given 50% weightage.

One deal for 30,000t was heard concluded for the Far East towards the end of last week. Another export tender floated by an Odisha based player for 55,000 t for Fe 63%, 3% Al pellet was heard to be under negotiations.

The recent standard grade pellet export tenders may fetch price levels of around $185-187/t CFR China. However, the outcome of the ongoing tender may give more price clarity. State-owned KIOCL floated an export tender for 50,000 t of pellets (62.5% Fe, 8% SiO2+Al2O3). The due date for the tender floated only for KIOCL’s empanelled customers is 7 April.

Interestingly, vessel freight rates have come down from $28-30/DMT levels seen in the last week to $22-25/DMT seen currently for Supramax vessels from India to China.

Market highlights-

• Domestic realisations higher than exports – As per SteelMint analysis, domestic pellet (Fe 63%, 3% Al) is assessed at INR 11,700/t ($154/t) loaded on to wagon for Barbil, eastern India. On the other hand, SteelMint’s pellet export price on ex-plant basis for the Barbil region remains at around INR 11,000/t ($145/t) exw. However, fall in sponge prices and lower bids have kept domestic trades on the lower side.
• Global iron ore prices rise w-o-w: The benchmark Fe 62% fines index increased by $7.85/t w-o-w on 5 April to $160.8/t CFR China. However, on a d-o-d basis prices remained stable on thin seaborne liquidity amid the Qingming holidays in China.
• DCE iron ore futures stable d-o-d: Iron ore futures on the Dalian Commodity Exchange (DCE) for Sept contract closed today (at 3 PM) at RMB 926.5/t, remained in line with RMB 926/t on 1 Apr’22. On a weekly basis, prices increased by around RMB 31.5/t ($5/t).
• Port inventories in China up w-o-w: Pellet inventory at China’s major ports increased to 5 mnt this week against 4.9 mnt a week ago.