News Room - Steel Industry

Posted on 09 Dec 2021

India: Pellet exports regain momentum on restocking by traders

Pellet export trade from India has regained momentum this week after global iron ore prices rallied, which turned traders active in taking positions for seaborne cargoes. SteelMint confirmed four export deals from India in the last couple of days.

Confirmed trades

Steelmint’s India pellet export index (Fe 64%, 3% Al, FOB east coast) has remained range-bound on a w-o-w basis at $126/t.

“Spot buying activities from Chinese end-users is yet to pick up but hike in global iron ore prices has fuelled some optimism amongst traders to restock cargoes. Spot iron ore prices in China yesterday rallied by $8/t following improved end-user demand outlook after the cut in reserve ratio”, highlighted an eastern India-based market source.

Domestic realisations higher than exports

As per SteelMint analysis, domestic pellet (Fe 64%, 3% Al) ex-plant realisation is assessed at INR 7,500-7,600/t for Barbil, eastern India. On the other hand, SteelMint’s domestic price assessment for the Barbil region stood at INR 8,200/t loaded to wagon.

Thus, the realisations in domestic sales are much higher than in exports. However, given the bulk volumes booked for exports, sales pressure from pellet players is likely to ease to some extent.

Rationale:

• Three confirmed deals were heard concluded from eastern India in this publishing window. Hence, the weightage given was 50%. KIOCL deal was not concluded due to lower Al content.
• Seven(7) indicative offers and bids were received, and five (5) were considered for calculation of the index, given a weightage of 50%.

Market highlights:

• The spot price of benchmark iron ore Fe 62% fines increased to $107/t CFR China on 8 Dec, up by $5.6/t w-o-w. The price dropped on a d-o-d basis against 108.55/t assessed on 7 Dec.
• Lumps are more cost-effective than pellets in the current scenario due to improved steel mill margins and lower coke prices. Mills were heard struggling to get rid of co-loaded fines and lump cargoes, and they were not able to consume those cargoes in the backdrop of strict production cuts.
• DCE iron ore futures’ Jan’22 contract closed at RMB 658.5/t ($103.72/t) (-RMB 1), d-o-d.

Pellet inventory at China’s major ports was recorded at 4.3 mn t last week, as against 4 mn t a week ago.

Source:SteelMint