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SteelMint: India's pellet export index falls as China demand dries up

SteelMint’s India pellet export index (Fe 64%, 3% Al, FOB east coast) has fallen marginally by $5/t, w-o-w, to $142/t. The pellet exports market continues to rema...

Pellets
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3 Nov 2021, 18:12 IST
SteelMint: India's pellet export index falls as China demand dries up

SteelMint's India pellet export index (Fe 64%, 3% Al, FOB east coast) has fallen marginally by $5/t, w-o-w, to $142/t.

The pellet exports market continues to remain dull for the week as market sources reported increased usage of iron ore lumps in China. Several sources said that the winter sintering controls were boosting lump demand as the lump usage ratio has increased in blast furnaces because it is more cost-effective than pellet.

As per sources, emissions controls in China will likely boost demand for high-grade iron ore. However, it is considered more cost-effective to use domestic pellets compared to imported material.

With steel margins declining fast, the market saw pellet demand and prices come off, pressuring demand.

The spot price of benchmark iron ore Fe 62% fines decreased by $23.2/t, w-o-w, on 3 Nov'21 to $96.45/t CFR China as against $119.65/t a week ago. DCE iron ore futures' Jan'22 contract closed at RMB 589.5/t ($92.12) (-RMB 9), d-o-d.

"The pellet export price indications for standard grade are around $155-165/t CFR China. The domestic pellet offers are more lucrative. Besides, Chinese buyers are not interested to buy at such levels. Hence, we are not looking for exports", said by an eastern India-based seller.

"There were some tenders floated by Indian players but we didn't hear any firm news on deals getting concluded", highlighted a tradersource.

As per data maintained with SteelMint, total pellet exports from Indian ports for the week (24-30 Oct'21) were recorded at 55,000t as against 130,000 t last week.

Rationale:

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

  • Six (6) indicative offers and bids were received, and five (5) were considered for calculation of the index, given a weightage of 100%.

Market highlights

  • 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.


  • Domestic pellet prices in India stable, w-o-w: SteelMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, has remained stable at INR 13,100/t DAP Raipur on 2 Nov'21.

  • Freight rates drop: Freight rates for 50,000-55,000 t export vessels from India's east coast (Paradip) to China have dropped by $7/t to $20/t this week.

 

 

3 Nov 2021, 18:12 IST

 

 

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