India: Pellet export market quiet in absence of firm bids, lower realizations

India's pellet export market has continued to remain inactive for yet another week despite higher global prices & rise in iron ore futures. SteelMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) stands at $152/t, increased by $4/t w-o-w.

Rationale

• No deal was reported so far this week, hence, not taken into price calculation under T1 trade and given no weightage in index calculation, Click here for methodology.
  
  
• Six (06) indicative offers, and bids were received, and all were considered for calculation of the index, given 100% weightage.
  
  

Factors weighing down sentiments in the Indian pellet export market -

• Realizations in domestic higher than in exports - As per SteelMint analysis, domestic pellet (Fe 63%, 3% Al) ex-plant realization is assessed at INR 12,200/t ($161) exw for Barbil, eastern India. On the other hand, SteelMint's pellet export price on ex-plant basis for the Barbil region remains stood at around INR 10,000/t ($132) exw, Therefore, domestic price realization is better than the exports which has kept them to focus on domestic sales.
  
  
• Preference to sinter - Chinese players are learned to be preferring sinters over pellets, which has kept them away from placing any firm bids for seaborne cargoes.
  
  
• Production impact amidst COVID surge - The operating rates and capacity utilization of steel mills, primarily in the Tangshan region have been severely impacted as COVID control measure continue to prevail. This in turn has impacted the demand for raw material too.
  
  

Market highlights-

• Global iron ore prices rise w-o-w: The benchmark Fe 62% fines index increased by $9.45/t w-o-w on 29 Mar'22 to $152.95/t CFR China. However, on a d-o-d basis prices inched up by $1 as buying interests for seaborne cargoes were still present.
  
  
• DCE iron ore futures up: Iron ore futures on the Dalian Commodity Exchange (DCE) for Sept contract closed today (at 3 PM) at RMB 895/t, up RMB 27.5/t ($4/t) d-o-d.
  
  
• Port inventories in China up w-o-w: Pellet inventory at China's major ports increased to 4.9 mnt this week against 4.6 mnt a week ago.
  
  

Outlook: Indian players may come up with fresh export tenders in the coming week. However, trade sources anticipate less chances of any sharp price hike considering current Chinese scenario and less active demand from EU.