India: BigMint's pellet export index hits over-three-month-low amid Chinese Lunar holiday lull
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- Lack of buyers due to Lunar holidays
- Chinese mills go on maintenance shutdown
- Global iron ore, futures contribute to downtrend
BigMint's India pellet (Fe 63%, 3% Al) export (FOB east coast) index declined by $7/tonne (t) w-o-w to $115/t on 7 February 2024. The index recorded its over three-month low amid sluggish market sentiments in China due to the Lunar holidays. Prices had touched these levels last in the first half of October 2023. No deals were recorded from the east coast of India in this publishing window. Buyers are now reluctant to make purchases.
A participant commented that "one significant factor contributing to the decline in pellet export prices is the Lunar holidays in China. Additionally, steel mills in China are undergoing maintenance shutdowns, further dampening demand and exacerbating oversupply concerns. Furthermore, the global iron ore fines and futures prices have also witnessed a decline, aggravating the downward pressure on pellet prices."
Another participant from eastern India said, "There were no buyers for the February 'depot cargo' and bids were even lower compared to domestic prices and these were not suitable for us to sell at. We are holding the offers and will sell after an improvement is seen in the offers in the seaborne market."
As per sources, Indian pellet makers are facing mounting concerns as production costs soar amidst rising iron ore prices. Despite this, domestic pellet prices have decreased due to lacklustre performance in the sponge and finished steel markets.
On the other hand, a few Chinese sources said that portside offers in China for Indian pellets (Fe 63.5%) have also decreased by around RMB 20/t ($3/t) w-o-w. Today's offers were recorded at around RMB 1,130/t at ($158/t) Qingdao inclusive of all import taxes and port charges.
With the lunar holidays in China on in full swing, demand has plummeted, exacerbated by steel mills undergoing maintenance shutdowns and adverse weather disrupting logistics in northern China.
Rationale:
- No pellet export deal was recorded and thus not taken into consideration. It was given 0% weightage in index calculation Click here for methodology.
- Ten (10) indicative prices were received, and ten (7) were considered for calculation of the index, and given a 100% weightage.
India's weekly pellet exports
India's pellet export shipments stood at 235,725 t in the first week of February compared to 470,145 t in the fourth week of January, as per vessel line-up data maintained with SteelMint.
Market highlights:
- Domestic realisations higher than exports: Domestic pellet (Fe 63%) prices fell by INR 350/t ($4/t) w-o-w to INR 8,500/t ($102/t) exw in Barbil, eastern India. On the other hand, BigMint's pellet export ex-plant price realisation for Barbil decreased further by INR 350/t ($4/t) to INR 7,900-8,000/t ($95-96/t) exw this week. The domestic realisation remained INR 500/t ($6/t) higher against exports.
- Global iron ore prices fall w-o-w: The benchmark Fe62% fines index decreased by $9/t w-o-w to $126/t CFR China on 6 February. Prices fell as the market witnessed fewer buyers with the approaching Lunar holidays in China. Demand from the mills was barely seen because most had taken off on holiday or begun maintenance on their blast furnaces using this vacation period.
- DCE iron ore futures fall w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for May 2024 contract sharply decreased by RMB 16.5/t ($2/t) to RMB 944/t ($133/t) on 31 January compared to RMB 960.5/t ($135/t) a week before. On a d-o-d basis, prices slightly rose by RMB 5 ($1/t) as against RMB 939/t ($132/t) yesterday.
- Pellet port inventories in China down: Pellet inventories at China's major ports decreased by 0.5 mnt to 6 mnt on 6 February compared to 30 January.
Outlook:
As per BigMint analysis, pellet prices may continue to decline in the foreseeable future, with minimal export trade expected from India.