India: BigMint's pellet export index stable; trade muted amid CNY holidays

• Buyers away from market amid CNY holidays
  
  
• Chinese portside activity muted
  
  
• Domestic prices under pressure
  
  

BigMint's India pellet (Fe 63%, 3% Al) export (FOB east coast) index remained stable w-o-w at $115/t on 14 February 2024. No deals were recorded from the east coast of India in this publishing window. As per sources, the holiday will continue till 18 February. However, next week trade may resume from India for March and April deliveries.

The pellet export market has experienced a prolonged period of muted activity, with buyers absent due to the China Lunar holidays observed from the 10-18 February. Buyers are on the sidelines during the holidays, which has kept the market sluggish.

Due to the sluggish export market, pellet offers in the domestic market too decreased by up to INR 400/t ($5/t) over the last few days.

A pellet exporter said: "Amid a subdued market environment, domestic offers for pellets have fallen in response to prevailing low demand. Despite efforts to stimulate activity, the lack of interest from both international and domestic buyers resulted in a downward pressure on prices, further dampening market sentiment."

The demand for March delivery cargo from China has also remained subdued. A few sources claimed that Indian pellet producers are currently holding raw pellet offers and waiting for Chinese buyers in expectation of decent offers next week. However, current price levels are only paper prices as no transactions from India were seen in the seaborne market.

On the other hand, a few Chinese sources said that portside offers in China for Indian pellets (Fe 63.5%) have increased by around RMB 10/t ($1/t) w-o-w on 9 February. The offers were recorded at around RMB 1,145/t at ($159/t) Qingdao inclusive of all import taxes and port charges.

Steel mills in China have already procured the material before the Lunar Holidays while some mills took blast furnace maintenance shutdown during the holidays. Pellet inventory at main ports of China increased by 0.5-07 mnt updated just before the CNY holidays.

China's central bank published its financial report late on February 9; it revealed that the country's money supply (M2) rose by Yuan 297.63 trillion, or 8.7%, in January compared to the same month in 2023.

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 eight (8) were considered for calculation of the index, and given a 100% weightage.
  
  

India's weekly pellet exports

India's pellet export shipments stood at 174,300 t in the second week of February compared to 235,725 t in the first week of February, as per vessel line-up data maintained with SteelMint.

Market highlights:

• Domestic export realisations narrow: Domestic pellet (Fe 63%) prices fell by INR 300/t ($4/t) w-o-w to INR 8,250/t ($99/t) exw in Barbil, eastern India. On the other hand, BigMint's pellet export ex-plant price realisation for Barbil remained stable at INR 7,900-8,000/t ($95-96/t) exw this week. The domestic realisation remained INR 250/t ($3/t) higher than exports; which decreased by INR 250/t ($3/t) compared to last week.
  
  
• Global iron ore prices rise w-o-w: The benchmark Fe62% fines index increased by $3/t w-o-w to $129/t CFR China on 13 February. Prices slightly rose as China's macroeconomic news positively impacted the post-Lunar New Year demand outlook for March-delivery cargoes last week, leading to increased confidence. Meanwhile, after the holidays, Chinese mills are anticipated to restart steel production, which is expected to maintain strong fundamentals.
  
  

Outlook:

As per BigMint analysis, pellet prices will remain volatile amid uncertain market dynamics following the CNY holidays. However, a few Indian sellers said that prices have edged up after the holidays, if previous years' trend is anything to go by.