SteelMint: India’s pellet export index inches closer to six-month high

India’s pellet export index (Fe 64%, 3% Al, FOB east coast) rose by $2/tonne (t) on a w-o-w basis to $153/t. The index has climbed to over five-month highs as similar price levels were seen in mid-Aug ’21.

India’s pellet export prices continue to show an upward momentum for yet another week. A leading eastern India-based producer concluded an export deal for 55,000 t of Fe 63% pellet (3.5% Al) at around $172-173/t CFR China towards the closing of last week.

However, no deals were heard so far this week, although a few tenders by eastern India-based players were heard in the market. Market participants are awaiting tender conclusions for price clarity.

“Fe 62% fines index fell by $4/t yesterday to $133.7/t CFR China, which turned sentiments slightly subdued. However, with recovery in iron ore futures today, sentiments have regained momentum”, shared a participant.

Rationale:

• One deal concluded this week for Fe 63% pellet was included in the calculation. Hence, after grade adjustment taken under price calculation, the weightage given was 50%.
• Seven (07) indicative offers and bids were received, and five (05) were considered for calculation of the index, given a weightage of 50%.

Domestic realisations higher than exports – As per SteelMint assessment, pellet (Fe 64%, 3% Al) ex-plant realisation in exports is assessed at INR 9,400-9,500/t for Barbil, eastern India.

On the other hand, domestic pellet prices in India remained range-bound on healthy demand and pellet producers were still exporting healthy volumes as price realization in the export market remained firm. SteelMint’s domestic assessment for prices in the Barbil region stood at INR 10,200-10,300/t loaded on to wagon.

Iron ore futures on the DCE for May’22 contract closed today at RMB 766.5/t ($121.09/t), up RMB 27/t d-o-d. The spot market has seen liquidity ahead of the Chinese Lunar New Year holidays.

Port inventories in China increase w-o-w – Pellet inventory at China’s major ports was recorded at 4.45 mn t this week, as against 4.2 mn t a week ago.