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India: BigMint's pellet export index falls amid weak market sentiments

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Pellets

BigMint Bureau

146 Reads

21 Aug 2024, 21:07 IST

India: BigMint's pellet export index falls amid weak market sentiments

Global fines prices under pressure w-o-w

No pellet export deals from India

Sellers waiting for price improvement

Indian pellet prices in the seaborne market showed fluctuation in the last one week with the absence of trades. BigMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) decreased by $2.5/t w-o-w to $88/tonne (t) on 21 August 2024. As per sources, in the last one week, the Indian pellet export market failed to conclude any export deals in the seaborne market from the pellet producers or traders.

The Indian pellet export market has been notably quiet, with no significant deals emerging recently. Chinese buyers, facing lower steel margins, have shifted their focus to sourcing cheaper imported materials, reflecting a cautious approach to minimising costs amid challenging market conditions.

On the Indian side, sellers have largely withdrawn from the export market due to unfavourable domestic pricing, which offers better returns compared to exports. Currently, there is a price gap of at least $10-15/t that needs to be addressed for Indian sellers to consider re-entering the export market. Notably, domestic prices in India are still INR 1,200-1,300/t ($14-15/t) higher than exports. Pellet (Fe 63%) prices in Odisha's Barbil remained stable at w-o-w to INR 6,750/t exw ($81/t). However, ex-plant realisation for pellet exports in Barbil recorded at INR 5,400-5,500/t exw ($74-65/t).

An eastern Indian pellet producer commented "We've been holding off on export deals, waiting for a price improvement in the market. Right now, domestic prices are also under pressure, which has made us cautious about entering into any new transactions. In fact, we haven't sold any cargo in the seaborne market for the last two weeks."

Rationale:

No pellet (Fe63%) export deals were recorded taken under price calculations. Hence these were accorded 0% weightage in the index calculation. Click here for detailed methodology.

Ten (10) indicative prices were received and seven (7) were considered for calculation of the index and given a 100% weightage.

Factors impacting pellet exports

Iron ore fines prices down w-o-w: The benchmark iron ore fines index fell by $3/t w-o-w to $95/t CFR China on 20 August. Prices fell amid weak downstream demand, which continued to exert pressure on raw material prices. As steel mills face significant financial challenges, there is reduced appetite for iron ore, particularly as mills remained cautious about restocking amid expectations of further output reductions.

DCE futures up w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for the January 2025 contract increased by RMB 29/t ($4/t) w-o-w to RMB 742/t ($103/t) on 21 August. On a d-o-d basis, futures prices rose by RMB 31.5/t ($5/t) against RMB 710.5/t ($98/t) yesterday.

Portside pellet prices in China stable w-o-w: Chinese sources said that Qingdao portside offers for Indian pellets (Fe 63.5%) remained largely stable w-o-w at RMB 925/t ($125/t) on 21 August, inclusive of all import taxes and port charges. Meanwhile, prices inched up by RMB 5/t ($1/t) d-o-d.

Pellet inventories at Chinese ports drop w-o-w: Pellet inventories at China's major ports decreased by 0.4 mnt to 5.25 mnt on 15 August, 2024 compared to last week, according to SteelHome data.