India: Pellet export index rises $11/t on recovery in global iron ore prices

SteelMint's India pellet export index (Fe 64%, 3% Al, FOB east coast) increased by $11/t, w-o-w, to $133/t. Rising global spot iron ore prices have pushed pellet export offers higher.

Several Chinese sources are of the view that pellet prices will remain supported on tight pellet supply in China. The power cuts in that country have reduced output from Chinese pellet plants, negatively impacting domestic pellet production.

During the Chinese Golden Week holidays, buyers showed subdued interest for pellet buying. However, with the end of the holiday period approaching, demand has witnessed a slight uptick.

Price indications for standard grade pellet (Fe 64%, 3% Al) are at around $150-160/t CFR China. However, as domestic realisations are comparatively better, not all players are active in the exports market at present.

SteelMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, increased by INR 700/t to INR 13,000/t DAP Raipur ($174) on 5 Oct.

State-run KIOCL has issued an export tender for Fe 63% (2% Al) pellet, which was due on 30 Sep. The tender was for KIOCL's empanelled customers with the minimum quantity offered at 55,000 t. The tender received limited participation and was cancelled. KIOCL is likely to re-issue the tender after the holidays in China.

As per data maintained with SteelMint, total pellet exports from Indian ports for the week (26-2 Sep) continued to remain nil for the consecutive second week.

Rationale:

• One deal for around 25,000 t was heard concluded from eastern India for China in the current publishing window. Hence, the weightage given was 50%.
  
  
• Seven (7) indicative offers and bids were received, and five were considered for calculation of the index, given a weightage of 50%.
  
  

Market highlights

• Spot iron ore prices increase, w-o-w: The spot price of iron ore benchmark Fe 62% fines increased by $5.45/t on 5 Oct to $117.80/t CFR China as against $112.35/t assessed a week ago.
  
  
• Pellet inventory in China up, w-o-w: Total pellet inventory at China's major ports was recorded at 4.3 mn t towards last week as against 4 mn t a week ago.