India: BigMint's pellet export index falls marginally w-o-w amid lack of buying interest

• Lower buying interest in seaborne market
  
  
• Current prices not feasible for Indian sellers
  
  
• Export offers may remain volatile till year-end
  
  

BigMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) inched down by $1.5/tonne (t) to $96/t on 20 March 2024. No deals were recorded from the east coast of India in this publishing window.

The pellet export market didn't perform well, and prices continued to fall. The majority of sellers from eastern India remained absent in the exports market and were in wait-and-watch mode, looking for improvements in the seaborne offers for pellets.

An eastern India-based pellet maker said: "The seaborne pellet market has not improved in the last one week, and even inquiries from China are also less for premium material. However, demand was not at par due to weak fundamentals in the last few days of this financial year. The current floating price of $110-112/t CFR is not feasible for us to sell."

The Indian domestic market also faced challenges, and prices recorded a downward trend with a fall of INR 300-500/t ($4-6/t) w-o-w for pellets. The bids in the recent OMC fines auction also fell by INR 400-950/t ($4-11/t) compared to last month, following the sluggish domestic and overseas markets.

Another trader said: "There is no option other than to remain silent for Indian pellet exporters as a widening gap has been witnessed between bids and offers. The demand from China has also not been enhanced yet for pellets, against a high inventory level at ports."

On the other hand, Chinese sources said that portside offers for Indian pellets (Fe 63.5%) have fallen by around RMB 25/t ($3/t) w-o-w on 20 March. Offers were recorded at around RMB 940/t at ($131/t) Qingdao, inclusive of all import taxes and port charges.

The finished steel market in China has not shown any sign of improvement as demand still remains under pressure. However, the buying interest by end-users slightly improved in the first two days of the week.

India's pellet export shipments stood at 160,200 t in the second week of March compared to 139,250 t in the first week, as per vessel line-up data maintained with BigMint. One cargo of 20,000t pellets was loaded from an eastern port for Malaysia.

Why are pellet export prices under pressure?

• Domestic realisation still better than exports: Domestic pellet realizations were higher by INR 1,200/t ($14/t) compared to exports. In the local markets, pellet (Fe 63%) prices fell by INR 250/t w-o-w to INR 7,600/t exw ($91/t) in Barbil, eastern India. BigMint's pellet export ex-plant price realisation for Barbil fell to INR 6,300-6-6,400/t exw ($76-77/t) this week.
  
  
• Iron ore spot prices fall w-o-w: The benchmark iron ore fines price dropped by $2/t w-o-w to $108/ t CFR China on 19 March. The market remained worried about decreased downstream steel demand, particularly without any support from the government. Due to poor production margins and a lack of demand, both steelmakers and local miners announced a reduction of 30% in operating rates. However, prices recovered in the first two days of this week amid improved buying interest.
  
  
• Futures prices edge up w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for May 2024 contract increased by RMB 16/t ($2/t) to RMB 823.5/t ($114/t) on 20 March compared to last week. On a d-o-d basis, prices remained largely stable.
  
  
• Pellet inventories at Chinese ports rise: Pellet inventories at China's major ports rose by 0.1 mnt to 7.9 mnt on 13 March compared to last week, according to SteelHome data. Pellet inventory at ports was recorded at an over-three-year high, as per SteelHome data.
  
  

Rationale:

• No pellet export deal was recorded and thus not taken into consideration. It was given nil weightage in the index calculation Click here for methodology.
  
  
• Ten (10) indicative prices were received, and eight (8) were considered for calculation of the index, and given a 100% weightage.
  
  

Outlook:

As per BigMint's analysis, pellet export offers may remain volatile towards the end of this financial year. However, inventory at the port and local demand in China are still not supporting the high-grade material.