SteelMint’s pellet export index (Fe 64%, 3% Al, FoB east coast) declined $4/t, w-o-w, and currently stands at $136/t. The index has fallen to a level which is the lowest in over nine months, as per SteelMint data. These levels were last witnessed towards end-Nov’20.
Pellet prices continued declining during the week amid subdued buying interest and no deals were reported on bid-offer disparity for the main market – China.
“The pellet export offers/price indications were heard at $165-170/t CFR China. However, today the market has shrunk and it doesn’t seem that this price will be absorbed. There are hardly any buyers at $150/t CFR China,” a pellet trader shared.
The Indian pellet export market remained dull for the weak on low China demand. A few market participants shared that the cost of production exceeds the pellet export realisation at current levels thereby reducing selling opportunities.
“The domestic realisation is currently higher than pellet export prices. The price difference appears to be at around INR 1,500-2,000/t with domestic sales still fetching a higher price. Hence, pellet producers are not interested in selling in the exports market as the ex-plant realisation stands at around INR 9,000-9,500/t while domestic prices are hovering at INR 11,000-11,500/t”, an eastern India-based pellet producer said.
Chinese steel mills are turning away from high-grade iron ore and increasing their tolerance of impurities. Mills were heard to have excess of lump stocks and are therefore not procuring pellet cargoes. However, high coke prices may, in near future, push pellet demand higher.
In order to cut steel production, some major state-owned mills in China are expected to launch maintenance at blast furnace facilities, which is likely to pull down iron and steel output for Sept. Since Jul, China has been asking steel mills to curtail production in such a way that their output during 2021 doesn’t exceed 2020 levels.
As per data maintained with SteelMint, total pellet export from Indian ports for the week (22-28 Aug) were recorded nil as against 71,640 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%.
- Seven (07) indicative offers and bids were received, and five were considered for calculation of the index and given a weightage of 100%.
Market highlights
- Spot iron ore prices down by $9/t d-o-d: The spot price of iron ore benchmark Fe 62% fines fell by $9.05/t today i.e on 1st Sept’21 to $143.55/t CFR China as steel production control worries in China fuelled demand concerns. The spot market remained sluggish and buying interest was weighed down by bearish sentiments.
On weekly basis too, prices fell by around $6/t as against $149.45/t assessed on 25th Aug’21. DCE iron ore futures’ Jan’22 contract closed at RMB 765/t ($118), down by RMB 43 today. - Pellet inventory in China slightly higher, w-o-w: Total pellet inventory at China’s major ports was recorded at 4 mn t last week as against 3.8 mn t a week ago.
- Domestic pellet prices marginally down: SteelMint’s bi-weekly domestic pellet (Fe 63%) index, PELLEX, fell marginally by around INR 50/t to INR 12,100/t DAP Raipur on 31 Aug’21. Indian pellet prices continued to decline further this week by around INR 300-2,500/t across regions on an uncertain market outlook and weak sentiments.
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