India: BigMint's pellet export index rises $2/t but trade yet to regain momentum

• One deal was reported this week
  
  
• Global iron ore prices, Chinese futures rise
  
  

BigMint's India pellet (Fe 63%, 3% Al) export (FOB east coast) index increased by $2/t w-o-w to $122/t on 24 January, 2024. No deals were recorded from the East Coast in the absence of firm inquiries, while some players continue to hold back offers owing to lower bids.

However, a south India-based pellet maker floated an export tender for 50,000 t of material (Fe 63%; Al2O3- less than 2%) today which was concluded at around $134/t FOB India.

Pellet offers in the seaborne market rose this week following an improvement in global iron fines offers and future prices. However, buyers remained sidelined and were not ready to deal at current offers. Pellet producers saw a lower number of inquiries, while a few even didn't receive inquiries from buyers for raw pellets in the overseas market.

An trader said, "Chinese buyers stayed away from the Indian market and were not ready to book material at premium prices. A few port-based plants got queries for lower alumina material but demanded a huge discount which was not possible for sellers. The recent increase in prices was only due to global market sentiments, while there was no improvement in pellet demand in the seaborne market."

Another pellet producer said: "The Chinese steel mills almost completed restocking of pellets ahead of the Lunar Holidays. That is why demand remained poor and buyers were not interested in concluding deals. We didn't receive any inquiry in the last few days. On the other hand, domestic iron ore prices also increased which will push up the cost of production. Market fundamentals were very weak for pellet makers."

On the other hand, a few Chinese sources reported that portside offers in China for Indian pellets (Fe 63.5%) have also increased by around RMB 20/t ($3/t) w-o-w. Today's offers were recorded at around RMB 1,170/t at ($164/t) Qingdao inclusive of all import taxes and port charges.

The construction and logistics sectors slowed down this week due to snowfall in certain regions of northern China. Rebar mills in the region, however, have not lowered their output. Participants in the market anticipate that these steel mills will provide more rebar to eastern and southern China in the coming weeks.

Rationale:

• No deal of pellet export was recorded and not taken into consideration. It was given 0% weightage in index calculation Click here for methodology.
  
  
• Ten (10) indicative prices were received, and six (6) were considered for calculation of the index, and given a 100% weightage.
  
  

India's weekly pellet exports

India's pellet export shipments stood at 386,550 t in the third week of January compared to 581,880 t in the second week of January, as per vessel line-up data maintained with SteelMint.

Market highlights:

• Domestic realisations higher than exports: Domestic pellet (Fe 63%) prices increased by INR 100/t ($1/t) w-o-w to INR 8,850/t ($106/t) exw in Barbil, eastern India. On the other hand, SteelMint's pellet export ex-plant price realisation for Barbil inched up by INR 150/t ($2/t) to around INR 8,500/t ($102/t) exw this week. However, the export realisation was lower by INR 300/t ($4/t) as against domestic prices.
  
  
• Global iron ore prices increase w-o-w: The benchmark Fe62% fines index sharply increased by $3/t w-o-w to $132/t CFR China on 23 January. The recent hike in prices is due to purchases for March-delivery cargoes combined with profitable import margins. As per reports, the market saw an increase in seaborne demand following restocking of iron ore by a few steel mills. Positive import margins made seaborne procurements favourable compared with portside purchases.
  
  
• DCE iron ore futures rise w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for May 2024 contract sharply increased by RMB 53/t ($7.5/t) to RMB 979/t ($138/t) on 24 January compared to 926/t ($130/t) a week before. On a d-o-d basis, prices rose by RMB 13.5 ($2/t) as against RMB 965.5/t ($136/t).
  
  
• Pellet port inventories in China inch up: Pellet inventories at China's major ports increased by 0.5 mnt to 5.9 mnt on 18 January compared to 11 January.
  
  

Outlook:

As per BigMint analysis, the overseas markets may witness lower trade volumes in the absence of buyers during the Chinese New Year holidays.