India: BigMint's pellet export index remains range-bound amid bid-offer disparity

• Chinese stimulus fails to support pellet market
  
  
• Participants cautious amid volatile Chinese prices
  
  

India's pellet export prices remained largely stable over the week due to a persistent gap between bids and offers. The demand for pellets has not improved, with market participants expressing concerns over sluggish trade momentum. The recent stimulus introduced by the Chinese government, aimed at boosting economic activity, has failed to provide significant support to the pellet market. Market players are cautious, citing a lack of positive outcomes from the policy measures.

BigMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) inched down by $1/tonne (t) w-o-w to $99/t on 16 October 2024. No pellet export deals were concluded in India in this publishing window.

A market participant said, "Indian sellers continue to set their sights on achieving $120/t CFR China for export deals, but the lack of strong demand from Chinese buyers has made negotiations challenging. Meanwhile, some sellers have opted to focus on the domestic market, which remains more profitable in comparison to the export market. Domestic deals are seen as a safer bet for securing better margins, especially given the current market uncertainties in the seaborne space."

Notably, domestic prices in India were still higher than export offers by INR 1,300-1,400/t ($15-16/t). Pellet (Fe 63%) prices in Odisha's Barbil were recorded stable w-o-w at 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 remained largely stable w-o-w at INR 6,300-6,400/t exw ($75-76/t).

On the other hand, the seaborne market also declined today due to a lack of positive sentiments following today's policy stimulus meeting in China, causing concerns for exporters regarding upcoming trades. Mills' buying interest remained on the lower side as they sought cheaper materials. The volatility in Chinese prices has been significant in recent times, so participants are focusing on merely observing the market dynamics.

Chinese sources said that Qingdao's portside offers for Indian pellets (Fe 63.5%) were recorded stable w-o-w at RMB 910/t ($129/t) on 16 October, inclusive of import taxes and port charges.

Rationale

• No pellet export deal was recorded this week, and thus, this category was not taken into consideration for 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 nine (9) were considered for calculating the index. These were given a 100% weightage.
  
  

Factors impacting pellet exports

• China's iron ore fines prices stable w-o-w: The benchmark iron ore fines index remained stable w-o-w at $105/t CFR China on 15 October. Prices remained range-bound amid weak trading, with Chinese mills maintaining low inventories and buying only as needed. Volatility in the futures market further contributed to uncertainty, prompting traders to adopt a wait-and-watch strategy, which suppressed liquidity and weighed on both seaborne and port stock prices.
  
  
• DCE futures remain range-bound w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for the January 2025 contract inched up by RMB 5/t ($1/t) to RMB 782.5/t ($110/t) on 16 October. On a d-o-d basis, prices fell by RMB 9/t ($1/t) against RMB 791.5 ($1/t) yesterday.
  
  
• Chinese portside pellet inventories steady w-o-w: Pellet inventories at China's major ports remained largely stable at 5.4 million tonnes (mnt) on 10 October compared to the pre-holiday level, according to SteelHome data.
  
  

Outlook

According to BigMint's analysis, pellet export prices are expected to remain volatile due to uncertain market dynamics. Some market participants are looking forward to the positive stimulus by the Chinese government for better trade results.