India: BigMint's pellet export index inches up w-o-w, market quiet

• Subdued pellet trades from India
  
  
• Bid-offers disparity widens
  
  

BigMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) inched up by $1.5/t w-o-w to $96.5/t on 19 June 2024. No deal was recorded from India in this publishing window, as per data maintained by BigMint.

The Indian pellet export prices remained rangebound over the past week, with minimal trading activity by Indian producers in the seaborne market. Buyers showed little interest in Indian premium material, preferring to shift towards iron ore lumps, as the preferred feed in recent weeks. Recent production cut announced by the steelmakers limits the demand for iron ore.

As per sources, South India-based pellet producer, KIOCL, has taken a shutdown of their pellet plant following the sluggish pellet export market. Notable, the plant has been in operation for the last 15 days.

The price gap between the domestic and export realisation still exist despite price observed in the domestic pellet in the last one week.

The domestic prices are around INR 1,600-1,700/t ($19-20/t) higher than export realisations. Pellet (Fe 63%) prices in Barbil fell by INR 300/t ($4/t) w-o-w to INR 8,050/t exw ($97/t). However, ex-plant realisation for pellet exports in Barbil recorded at INR 6,400/t exw ($77/t).

The East Coast producers are not getting workable prices from overseas buyers therefore they have diverted material in the domestic market. However, sources said that the leading pellet exporter from India located in the eastern region sold a premium material cargo this week after a slight improvement in the global iron ore fines prices. However, the deal has yet to be confirmed by the pellet producer.

A market participant said that the bid-offers gap is still over $10/t between the buyer and sellers due to low pellet demand in the Chinese steel market. Their inventory level was recorded at higher level and did not focus on the seaborne cargos.

One exporter mentioned that prices for the July delivery cargo have increased this week. Some producers have quoted offers of $113-115/t CFR China from buyers, which seems to be feasible in the current market conditions. However, the exporter did not lower their offers below $120/t CFR China and opted to wait for market improvements.

Rationale:

• No pellet export deal was recorded in this publishing window and hence accorded 0% weightage in the index calculation Click here for detailed methodology.
  
  
• Nine (9) indicative prices were received, out of which seven (7) were considered for calculation of the index and given a 100% weightage.
  
  

What factors affecting pellet export market?

• Iron ore fines supportive w-o-w: The benchmark iron ore fines index increased w-o-w by around $2/t to $106/t CFR China on 11 June. The prices improved amid positive macroeconomic news which signals a possible rise in demand in the near term. The increase in pig iron production and higher utilisation rate of the BF-based mills kept iron ore demand and prices supported.
  
  
• DCE futures up w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for the September 2024 contract increased by RMB 13.5/t (2/t) w-o-w to RMB 824/t ($113/t) on 19 June, 2024. On a d-o-d basis, future prices remained largely stable against RMB 820.5/t ($113/t) yesterday.
  
  
• Portside pellet prices rise w-o-w: Chinese sources said that Qingdao portside offers for Indian pellets (Fe 63.5%) dropped by RMB 20/t ($3/t) w-o-w on 19 June. Offers were recorded at around RMB 990/t ($135/t), inclusive of all import taxes and port charges.
  
  
• Pellet inventories drop w-o-w: Pellet inventories at China's major ports dropped by 0.2 mnt to 6.55 mnt on 13 June, 2024 compared to the last week, according to SteelHome data.
  
  

Weekly exports drop

India's pellet exports were recorded at around 116,100 t in the second week of June compared to 353,173 t in the first week of June, as per vessel line-up data maintained with BigMint.

Outlook

Pellet export offers in the seaborne market are anticipated to remain rangebound in the near term due to the slowdown in China and insufficient margins for pellet imports.