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SteelMint: India pellet export index edges up as global iron ore prices recover

Steelmint’s India pellet export index (Fe 64%, 3% Al, FOB east coast) has risen marginally by $3/t w-o-w to $129/t. Prices have recovered on the back of a hike in...

Pellets
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24 Nov 2021, 19:43 IST
SteelMint: India pellet export index edges up as global iron ore prices recover

Steelmint's India pellet export index (Fe 64%, 3% Al, FOB east coast) has risen marginally by $3/t w-o-w to $129/t. Prices have recovered on the back of a hike in global iron ore fines prices and recent export deals concluded from India.

The spot price of benchmark iron ore Fe 62% fines increased to $99.45/t CFR China on 23 Nov'21 as against $90.4/t a week ago. Restocking demand pushed up prices in addition to positive sentiments in the futures market. DCE iron ore futures' Jan'22 contract closed at RMB 616.5/t ($96.5/t) (+RMB 29.5), d-o-d.

"Indian pellet export price indications for Fe 64%, 3% Al, are hovering at $150/t CFR China. However, the bids are nowhere closed to these levels", shared a pellet maker.

A couple of deals were heard concluded from India to China this week from a West Bengal-based player but the prices could not be confirmed till the time of publishing this index.

Export realisations still lower than domestic offers

As per SteelMint analysis, Indian pellet ex-plant realisation is assessed at INR 7,400-7,700/t for Barbil (eastern India). On the other hand, SteelMint's domestic price assessment for Barbil region stood at INR 9,000-9,500/t loaded to wagon, lower by INR 500-600/t w-o-w. Hence, the preference for domestic sales remains higher compared to exports.

The Indian pellet export market continues to slide downward due to falling realisations and better domestic profit margins. Indian producers who could sell solely in the domestic market chose to do so.

The thinning margins reduced demand for direct feeds like lump and pellet. There is expectation of a disruption in supply from Australia along the Chinese coast. This may boost Chinese interest for Indian raw materials.

As per data maintained with SteelMint, pellet exports from Indian ports for the week (14 Nov-20 Nov) continued to record nil for the second consecutive week.

Pellet inventory at Chinese ports stable w-o-w: Total pellet inventory at China's major ports was recorded at 4.3 mn t last week, stable w-o-w.


Rationale:

  • No confirmed deal was heard concluded in this publishing window. Hence, the weightage given was 0%.

  • Five (5) indicative offers and bids were received, and four (4) were considered for calculation of the index, given a weightage of 100%.

"If we see a good and continuous rally in global prices, then there is a possibility of pellet export prices finding support", highlighted an eastern India-based pellet producer.

 

24 Nov 2021, 19:43 IST

 

 

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