India: BigMint's pellet export index falls $5/t w-o-w post-Chinese holidays
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- Bearish market sentiments post-Chinese holidays
- Global fines spot, future prices fall this week
- Indian exporters adopt wait-and-watch stance
The seaborne iron ore pellet market saw a decline in prices after participants returned from the Golden Week holidays in China. Market activity was subdued, with buyers hesitant to engage in new deals, as overall sentiment remained weak.
BigMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) decreased by $5/tonne (t) w-o-w to $100/t on 9 October 2024. No pellet export deals were concluded in India in this publishing window.
A South India-based pellet maker floated an export tender for 50,000 t of material (Fe 63%; Al2O3+SiO2 8%) a few days before the Chinese Golden Week holidays (1-7 October). As per sources, the tender successfully received bids at $110/t FOB India.
Trade momentum slowed down, owing to a fall in prices and a lack of interest. However, the market was uncertain following the holidays, with weak demand for higher-grade material due to lower steel margins. Chinese buyers are now focusing on cheaper, lower-grade iron ore fines to reduce production costs.
Notably, domestic prices in India were still higher than export offers by INR 1,200-1,300/t ($14-15/t). Pellet (Fe 63%) prices in Odisha's Barbil increased by INR 100/t ($1/t) w-o-w to INR 7,750/t ($92/t) exw, which turned the material viable for plants located near the ports. Meanwhile, ex-plant realisation in pellet exports in Barbil fell INR 400/t ($5/t) w-o-w to INR 6,400-6,500/t exw ($76-77/t).
On the domestic front, India's iron ore pellet market performed well, supported by demand for finished steel. Prices of iron ore pellets rose across the country, with several bulk transactions concluded. The positive domestic market outlook provided some balance to the weaker international sentiment, offering Indian sellers the option to focus on the domestic market if export conditions remain sluggish.
Indian sellers, however, held back, carefully monitoring market trends and awaiting better price opportunities. Some sellers aimed for prices of $120/t CFR China to secure higher margins on their export deals.
Rationale
- No pellet export deal was recorded this week, and thus, this category was not taken into consideration for the price calculation. Hence, T1 trade was accorded 0% weightage in the index calculation. Click here for the detailed methodology.
- Eleven (11) indicative prices were received, and Ten (10) were considered for calculating the index. These were given a 50% weightage.
Factors impacting pellet exports
- Iron ore fines prices decrease w-o-w: The benchmark iron ore fines index fell $3/t w-o-w to $105/t CFR China on 8 October amid weak market sentiments post-Chinese holidays. End-users delayed procurement to await clearer market directions. Expectations for the post-holiday period were optimistic, as mills have resumed operations, but actual demand was slow. Returning participants may need a few days to find the market's support and determine resistance levels.
- DCE futures fall post-holiday: Iron ore futures on the Dalian Commodity Exchange (DCE) for the January 2025 contract fell RMB 44/t ($5/t) to RMB 777.5/t ($110/t) on 9 October compared to the pre-holiday level. On a d-o-d basis, prices remained largely stable.
- Portside pellet prices in China up w-o-w: Chinese sources said that Qingdao's portside offers for Indian pellets (Fe 63.5%) were recorded at RMB 905/t ($128/t) on 9 October, inclusive of import taxes and port charges. Meanwhile, portside pellet prices inched up by RMB 10/t ($1/t) d-o-d today.
- Pellet inventories at Chinese ports up w-o-w: Pellet inventories at China's major ports increased by 0.2 mnt to 5.5 mnt on 9 October compared to last week, according to SteelHome data.
Outlook
According to BigMint's analysis, pellet export prices are expected to remain volatile amid uncertain market dynamics. This week, trades may remain slow due to the weak market sentiments.