Go to List

India: BigMint's pellet export index falls by nearly $4/t w-o-w amid drop in global fines prices

...

Pellets
By
88 Reads
13 Nov 2024, 19:28 IST
India: BigMint's pellet export index falls by nearly $4/t w-o-w amid drop in global fines prices

  • Domestic prices exceed export offers by INR 2,000/t

  • Pellet production costs rise amid higher iron ore prices

Pellet prices in the seaborne market experienced a downturn recently, reflecting the impact of drops in the global iron ore fines spot and futures indices. This decline was driven by the Chinese government's debt package announcement, which amounted to RMB 10 trillion, and followed the conclusion of the recent US presidential elections. Additionally, demand for pellets was limited in the seaborne market amid bid-offer disparities between buyers and suppliers.

BigMint's India pellet (Fe 63%, 3% Al) export index (FOB East Coast) fell by $3.5/t w-o-w to $95/t on 13 November 2024. No export deal was concluded in this publishing window.

A south India-based pellet producer floated an export tender for 50,000 t of material (Fe 63%, 8% Al2O3+SiO2) last week. However, the tender failed to fetch successful bids amid weak market sentiments and lower pellet prices in the seaborne market.

The gap between export and domestic realisations has widened, with domestic prices in India higher than export offers by INR 2,000-2,100/t ($24-25/t). Pellet (Fe63%) prices in Odisha's Barbil increased by INR 100/t ($1/t) w-o-w to INR 8,200/t ($97/t) exw. Meanwhile, ex-plant realisation in exports from Barbil fell by INR 300/t ($4/t) w-o-w to INR 6,000-6,100/t exw ($70-71/t). As a result, sellers are currently more focused on domestic trades.

An Indian seller noted, "Current export prices are simply not favourable for us. Producers have shifted focus to domestic deals to achieve better margins. Eastern India sellers are seeing stronger returns in domestic sales, with pellet production costs being particularly high due to elevated iron ore prices. This shift reflects a cautious market, as exporters are intent on hedging against unfavourable seaborne market conditions."

Meanwhile, sources said, Chinese mills are seeking price competitive alternatives from Middle East and CIS regions. Chinese mills are also exploring medium-grade fines with higher alumina and silica content to reduce import costs in light of their struggling domestic market.

Pellet inventories at China's major ports inched down by 0.1 mnt to 5.2 mnt on 7 November compared to last week, according to SteelHome data.

Rationale

  • No pellet export deal was recorded in the last week; thus, this category was not taken into consideration for price calculations and accorded 0% weightage in the index calculation. Click here for detailed methodology.

  • Eleven (11) indicative prices were received and ten(10) were considered for calculation of the index and given a 100% weightage.

Factors impacting pellet exports

  • Iron ore fines prices drop by $5/t w-o-w: The benchmark iron ore fines index decreased by $5/t w-o-w to $101/t CFR China on 12 November. Limited trading, low buying interest, and a weak market outlook weighed on prices. Market sentiment remains subdued following disappointing policy announcements from China's National People's Congress on 8 November.

  • DCE futures fall w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for the January 2025 contract inched down by RMB 19/t ($3/t) w-o-w to RMB 762.5/t ($106/t) on 13 November. On a d-o-d basis, futures prices remained largely stable against yesterday's RMB 766/t ($106/t).

  • Portside pellet prices in China stable w-o-w: Chinese sources said that Qingdao portside offers for Indian pellets (Fe 63.5%) remained unchanged w-o-w and d-o-d at RMB 905/t ($125/t) on 13 November, inclusive of all import taxes and port charges.

Outlook

According to BigMint, prices are likely to remain volatile, with the lack of clarity on the tradable prices for both sellers and buyers. If global prices remain under pressure, pellet export deals from India are expected to remain limited.

13 Nov 2024, 19:28 IST

 

 

You have 1 complimentary insights remaining! Stay informed with BigMint
;