Decline in global iron ore prices, absence of firm Chinese bids and bearish market sentiments on steel output cuts in China continue to weigh on the Indian pellet export market. SteelMint’s pellet export index (Fe 64%, 3% Al, FoB east coast) has recorded a drop of around $4/t w-o-w and currently stands at $217/t.
Indian pellet producers had floated export tenders last week. According to market sources, the tenders received poor response. Disparity in bids and offers continue to keep the market muted.
Market sources’ views on prices remain unclear as most participants believe that even bigger production restrictions are on the anvil in China. Liquidity in the market remained low as end-users were not active in procurements, saddled as they are with enough inventories.
“The market is very silent. Lump and pellet demand from end-users are dull amid uncertainties related to production cuts,” highlighted a pellet trader.
“We are offering standard grade pellets at $255/t CFR but there are hardly any buyers. The market is weak,” informed an eastern India-based pellet maker.
The Indian pellet export market witnessed a fall amid quarantine regulations and higher freight rates. Mills have lower buying interest given the uncertainty around steel production cuts. A few trader sources expect prices to correct in the coming time.
Rationale:
- No pellet deal was heard in the publishing window. Hence, the weightage given to it is 0%.
- Eight (08) indicative offers were received, out of which six were considered for calculation of the index and given a weightage of 100%.
Market highlights
- Spot iron ore prices fall sharply: Spot iron ore prices fell sharply today to $213.6/t as against $220.05/t on 19 Jul’21. Prices have dropped by $4.25/t w-o-w as against $217.85/t CFR China a week ago.
- Iron ore futures slide – Dalian iron ore futures fell by 4.7% on 21 Jul as demand for the steelmaking raw material slumped, with Chinese mills reducing production following government notices. DCE iron ore futures Sept contract today closed at RMB 1,174/t ($181), lower by RMB 59 ($9) d-o-d.
- Pellet inventory stable w-o-w: Total pellet inventory at major Chinese ports stood at 4.1 mn t, stable w-o-w.
- Pellet export realisations fall: The ex-plant realisation of Indian pellet exports from eastern India (Odisha) has fallen considerably in the last two weeks and currently stands tentatively at around INR 13,500/t. On the other hand, domestic price indications in Barbil are at INR 15,000-15,100/t (loaded on to wagons). SteelMint’s bi-weekly domestic pellet index, PELLEX, has declined sharply by INR 850/t to INR 14,700/t DAP Raipur.
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