India: BigMint's pellet export index rebounds w-o-w, but deals elude

• Chinese portside pellet inventories drop w-o-w
  
  
• Domestic prices exceed export offers by INR 1,700/t
  
  

Pellet prices in the seaborne market rebounded over the past few days, aligning with the rise in global iron ore fines prices. Market sentiment remains cautious, with muted inquiries and demand for premium materials. Traders noted that the disparity between bids and offers continues to hinder active transactions, as both buyers and sellers are hesitant to finalize deals.

BigMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) rose by $1.5/t w-o-w to $96.5/t on 20 November 2024. No export deal was concluded in this publishing window. The pellet market remained weak in November as not many export deals were concluded in the Indian waters due to poor demand from overseas markets.

A seaborne trader commented: "With limited market activity, participants are adopting a wait-and-watch approach, anticipating better price stability before making commitments. The disparity between bids and offers needs to narrow for transactions to pick up."

The gap between export and domestic realizations has narrowed. Domestic prices are higher than export offers by INR 1,700/t ($20/t). Pellet (Fe63%) prices in Odisha's Barbil decreased by INR 250/t ($3/t) w-o-w to INR 7,950/t ($94/t) exw. Meanwhile, ex-plant realisation in exports from Barbil rose by INR 300/t ($4/t) w-o-w to INR 6,250/t exw ($74/t).

An eastern India-based seller informed, "We have withdrawn our pellet export offers following today's Odisha Mining Corporation's (OMC's) auction results. Domestic pellet prices are currently more lucrative, prompting us to reassess production costs before committing to exports."

The Chinese government's recent economic stimulus measures have provided some support to seaborne prices. However, Chinese mills remain focused on sourcing portside material, which is more cost-effective and readily available. Portside pellets are still the preferred choice for mills due to better pricing and quicker delivery which has caused the drop in inventory available at ports.

Pellet inventories at China's major ports dropped by 0.3 mnt to 4.9 mnt on 14 November compared to last week, according to Steelhome data.

Rationale

• No pellet export deal was recorded in the last week; thus, this category was not taken into consideration for price calculations and accorded 0% weightage in the index calculation. Click here for detailed methodology.
  
  
• Ten (10) indicative prices were received and serve (7) were considered for calculation of the index and given a 100% weightage.
  
  

Factors impacting pellet exports

• China iron ore fines prices range-bound w-o-w: The benchmark iron ore fines index inched up by $1$/t w-o-w to $102/t CFR China on 19 November driven by positive macro-economic developments. Market sentiment improved following new real estate announcements, including incentives for state-owned enterprises to buy small commercial housing units in Guangzhou and reduced transaction taxes. The NDRC also reaffirmed its commitment to annual economic growth targets, boosting optimism further.
  
  
• DCE futures up w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for the January 2025 contract rose by RMB 12/t ($2/t) w-o-w to RMB 774.5/t ($108/t) on 20 November. On a d-o-d basis, futures prices remained stable against yesterday's RMB 776/t ($108/t).
  
  
• Portside pellet prices in China rise w-o-w: Chinese sources said that Qingdao portside offers for Indian pellets (Fe 63.5%) increased by RMB 15/t ($2/t) w-o-w to RMB 920/t ($127/t) on 20 November, inclusive of all import taxes and port charges.
  
  

Outlook

According to BigMint estimates, trades are expected to remain under pressure in the coming days. However, after the OMC auction, sellers may revise their export offers, and additional support from global fines indices could be beneficial for export transactions.