India: Pellet export index up by $17/t w-o-w

SteelMint's India pellet export index (Fe 64%, 3% Al, FOB east coast) increased by $17/tonne (t), w-o-w, to $150/t. Rise in global iron ore prices after resumption of trade post-the China's Golden Week holidays have pushed up prices. However, with export realisations still being lower than domestic, not many players are active in the export market currently, SteelMint learned.

Indian pellet export prices picked up on continued restocking as steel production levels improved. Procurement centered around medium- to high-grade fines, as well as direct feed, on expectations of winter sintering controls.

The power shortage has affected operations of downstream users of finished steel products. Hence, concerns over steel demand continue. Also, it was heard that some steel downstream users can only operate for half of a month every month due to the power shortage.

The supply of pellet feed is heard to be limited. Ferrexpo has recorded pellet production at 2.6 mn t in Q3CY'21, down 9% on quarter following disruption due to pelletiser upgradation. The company is the world's third largest exporter of pellets to the steel industry. Also, it is expected that the sintering restrictions may not extend to all regions.

KIOCL had issued an export tender for Fe 63% (2% Al) pellets, which was due on 12 Oct'21. The tender was for KIOCL's empanelled customers. The minimum quantity offered was 55,000 t. As per market sources reported to SteelMint, the tender has been concluded at $165/t FOB. However, the destination could not be confirmed at the time of publishing this report.

As per data maintained with SteelMint, total pellet exports from Indian ports for the week (3-9 Sept'21) were recorded at 53,000 t as against nil for the last week.

Rationale:

• No deal was heard to have been concluded in the publishing window. Hence, the weightage given was 0%.
  
  
• Five (5) indicative offers and bids were received, and all were considered for calculation of the index, given a weightage of 100%.
  
  

Market highlights -

• Spot iron ore prices up $10.7/t w-o-w: The spot price of iron ore benchmark Fe 62% fines increased by $10.7/t w-o-w on 12 Oct to $128.5/t CFR China as against $117.8/t assessed a week ago.
  
  
• Pellet inventory in China down, w-o-w: Total pellet inventory at China's major ports was recorded at 4 mn t last week as against 4.3 mn t a week ago.
  
  

• Domestic pellet prices in India up on week: SteelMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, increased by INR 800/t to INR 13,900/t DAP Raipur on 12 Oct'21.