India: BigMint's pellet export index rises $11/t w-o-w in recent deal

• Market sentiments in China improve amid stimulus measures
  
  
• Domestic pellet offers in India up INR 300-500/t

  
  
  

Export prices of pellets from India improved this week in the global market amid the approaching Chinese national holiday in the first week of October. Seaborne buyers showed interest, with negotiations underway with producers in Odisha. The recent positive changes in Chinese macro-economic factors led to an increase in the global fines spot and futures indices, which supported Indian pellet export offers.

BigMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) increased by $11/tonne (t) w-o-w to $94/t on 25 September 2024. A pellet (Fe 63%) export deal of 55,000 t was concluded by an Odisha-based seller at $108/t CFR China today for mid-Oct sipment. No other pellet export deal was noted in India recently, as per sources.

The recent increase in Chinese futures and finished steel sales led to higher raw material purchases for pre-holiday restocking.

Market participants are still not optimistic about the sudden price rise because the tradable volume has not significantly increased. Major players stated that only one or two producers were affected by the recent spike, and other transactions are still pending finalisation.

Notably, domestic prices in India are still INR 1,000/t ($12/t) higher than export offers. Pellet (Fe 63%) prices in Odisha's Barbil increased by INR 400/t ($5/t) w-o-w to INR 6,850/t ($82/t) exw, which turned the material viable for plants located near the ports. Meanwhile, ex-plant realisation in pellet exports in Barbil rose by INR 700-800/t ($8-9/t) w-o-w to INR 5,800-5,900/t ($69-70/t) exw.

Domestic prices of Indian pellets increased by INR 300-500/t ($4-6/t) this week following premium bids in the latest auction from the Odisha Mining Corporation (OMC). There was robust buying interest in the domestic market, and pellet producers sold a decent volume at higher prices.

An eastern Indian pellet trader observed, "Seaborne pellet prices have temporarily increased to $105/t CFR China, but it is uncertain if the market has truly improved. Few Indian players are targeting $110/t CFR China. Last week, a pellet producer received a bid at $102/t CFR China, which is unprofitable considering domestic prices and demand. This surge is expected to last only two to three days, as Chinese mills are trying to procure more material before the holidays."

Rationale

• One (1) pellet export deal was recorded this week, and taken into consideration for the price calculation. Hence, T1 trade was accorded 50% weightage in the index calculation. Click here for the detailed methodology.
  
  
• Ten (10) indicative prices were received, and eight (8) were considered for calculating the index. These were given a 50% weightage.
  
  

Factors impacting pellet exports

• Iron ore fines prices increase w-o-w: The benchmark iron ore fines index rose $3/t w-o-w to $95/t CFR China on 24 September. China's central bank announced a 0.5% cut in the reserve requirement ratio, which boosted market sentiment and increased buying interest in the seaborne market. However, the fundamental supply-demand structure in the industry has not seen a significant shift, and the loose supply-and-demand situation is likely to persist for some time.
  
  
• DCE futures rise w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for the January 2025 contract rose RMB 24.5/t ($4/t) w-o-w to RMB 699.5/t ($99/t) on 24 September. On a d-o-d basis, prices sharply increased by RMB 41/t ($6/t) yesterday.
  
  
• Portside pellet prices in China up w-o-w: Chinese sources said that Qingdao's portside offers for Indian pellets (Fe 63.5%) improved by RMB 20/t ($3/t) w-o-w to RMB 840/t ($117/t) on 25 September, inclusive of all import taxes and port charges. However, portside pellet prices inched down by RMB 5/t ($1/t) d-o-d today.
  
  
• Pellet inventories at Chinese ports largely stable w-o-w: Pellet inventories at China's major ports decreased slightly by 0.05 mnt to 5.25 mnt on 19 September 2024 compared to last week, according to SteelHome data.
  
  

Outlook

According to BigMint's analysis, pellet export prices are expected to remain volatile leading up to the Chinese national holidays. Indian sellers may be able to finalise a few more transactions in the coming days before Chinese Golden week holidays.