SteelMint: India’s pellet export index falls to 1-year low in absence of deals

SteelMint’s India pellet export index (Fe 64%, 3% Al, FOB east coast) declined $16/t, w-o-w. It currently stands at $116/t. The index has fallen to its lowest level in a year, as per SteelMint data. These levels were last witnessed towards end-Sep’20 when prices were at around $115/t.

The pellet exports market remains dull with no deals being heard and buyers’ interest seems minimal at current levels.

“Offers for pellet in the domestic market continue to remain higher than realisations in the exports market. Hardly any bids have been heard lately. However, price idea may be $140-145/t CFR China”, a buyer source shared.

“With another steep drop in global iron ore fines prices today, I believe bids for pellets must be below $135/t CFR levels”, said an eastern India-based pellet maker.

The Chinese mills have curtailed production which is expected to continue to pull down iron and steel output for Sep. Since Jul, China has been asking steel mills to reduce production so that 2021 output doesn’t exceed that of 2020.

However, 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.

As per data maintained with SteelMint, total pellet exports from Indian ports for the week (5-11 Sep) were recorded at 129,000 t as against 285,750 t a week ago.

Rationale:

• No deals were heard concluded for China in the current publishing window. Hence, the weightage given was 0%.
• Six (06) indicative offers and bids were received, and five were considered for calculation of the index, given a weightage of 100%.

Market highlights

• Spot iron ore prices down by $20/t w-o-w: The spot price of iron ore benchmark Fe 62% fines fell by $19.65/t on 15 Sep to $113.4/t CFR China as against $133.05/t assessed a week ago. Also, prices fell by around $7/t, d-o-d. DCE iron ore futures’ Jan’22 contract closed at RMB 692.5/t ($108) (-RMB 18.5)
• Domestic pellet prices fall further: SteelMint’s bi-weekly domestic pellet (Fe 63%) index, PELLEX, drifted down by INR 200/t to INR 11,100/t DAP Raipur on 14 Sep. Indian pellet prices have witnessed a continuous decline this week in the range of INR 100-750/t across regions except south India’s Bellary market.