SteelMint’s pellet export index (Fe 64%, 3% Al, FoB east coast) declined $8/t w-o-w and currently stands at $140/t. The index has fallen to a level which is the lowest in nine months, as per SteelMint data. The weakness in seaborne iron ore pellet prices continued on subdued buying interest from China.
Chinese steel mills are shifting away from high-grade iron ore and increasing their tolerance of impurities. Mills were not heard procuring new pellet cargoes for a while and are in fact in possession of excess lump stocks.
Last month, China’s crude steel output totalled 86.8 mn t, down 8.4% on year, with daily production down 10.5% on month to average 2.8 mn t/day, CISA said, quoting data from the country’s National Bureau of Statistics (NBS).
Indian pellet producers were heard favouring domestic sales but several sources expressed reservations about the actual volumes that the domestic market could absorb, saying that a certain quantity would still need to get exported.
“With spot iron ore prices rebounding, there could be some movements in the export market. However, the short-term outlook seems weak and players are actively selling in the domestic market thereby pushing prices downwards”, highlighted a market participant.
South India-based KIOCL has heard to have concluded a deal for Fe 63% and 2% Al pellet off the tender around 7-10 days back for Middle East. As per market sources, the deal was heard concluded at $172/t FoB India.
As per data maintained with SteelMint, total pellet export from Indian ports for the week (15-21 Aug) were recorded at 71,640 t as against 148,555 t a week ago. Also, pellet handling for the week fell substantially compared to 361,723 t towards the last week of July’21.
Rationale:
- No deals were heard to have been concluded in the current publishing window. Hence, the weightage given was 0%.
- Three (03) indicative offers were received, and considered for calculation of the index and given a weightage of 100%.
Market highlights
- Spot iron ore prices down w-o-w: The spot price of iron ore (benchmark Fe 62% fines) dropped w-o-w by around $5/t to $148.6/t CFR China on 24 Aug’21. Prices of Chinese spot iron ore fines of 62% ferrous content opened at $162.5/tonne (t) CNF China last week and decreased to $139.1/t CNF China towards the weekend.
DCE iron ore futures’ Jan’22 contract closed at RMB 802.5/t ($124) (-RMB 15) today. - Pellet inventory in China slightly higher w-o-w: Total pellet inventory at China’s major ports was recorded at 3.8 mn t last week as against 3.6 mn t a week ago.
- Domestic pellet prices in India drop on aggressive selling: SteelMint’s bi-weekly domestic pellet (Fe 63%) index, PELLEX, continued to fall sharply from last week by INR 1,150/t to INR 12,150/t DAP Raipur on 24 Aug’21. Around 80,000 t of deals were recorded by SteelMint from 21-24 Aug’21. India’s domestic pellet market continues to witness downward pressure on aggressive domestic sales following falling export realisations.
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