India: Pellet export prices drop $1/t w-o-w in closing week of CY'24

• Market muted amid Gregorian New Year holidays
  
  
• Chinese mills focus on procuring portside material
  
  

India's pellet export prices remained largely stable this week due to subdued demand from buyers. Major buyers stayed away from the market due to the New Year holidays, resulting in reduced inquiries and lower bids for Indian pellet exporters.

BigMint's India pellet (Fe 63%, 3% Al) export index (FOB eastern coast) fell by $1/tonne (t) w-o-w to $96/t on 1 January 2025. No deal was recorded from India's east coast over the course of the week.

Notably, BigMint's pellet export index dropped by $13.5/t y-o-y, to $99.5/t FOB eastern coast in CY'24 (Calendar Year) compared to $113/t in CY'23.

However, sources informed BigMint that an India-based pellet maker concluded a export deal for around 50,000 t (Fe 63%, 8% Al2O3+SiO2) through a tender last week. Seaborne buyers showed interest in premium material, and it was heard that the deal was concluded at $105-106/t FOB India.

An eastern coast-based seller commented, "We adopted a cautious stance, avoid making deals in light of the current unfavourable price levels. The market has been quiet this week, with low bids and almost no interest from Chinese buyers, and exporting at these prices is unviable."

The gap between export and domestic realizations widened this week amid a drop in export offers against stable domestic ones. Domestic prices are higher than export offers by INR 1,200/t ($14/t). Pellets (Fe63%) in Odisha's Barbil remained stable w-o-w at INR 7,550/t ($88/t) exw. Meanwhile, ex-plant realisation in exports from Barbil stood at INR 6,350/t ($74/t) exw.

Meanwhile, Chinese mills focused on purchasing portside material to optimize their import margins, further denting demand for Indian pellets in the export market. This trend prompted some exporters to shift their focus to the domestic market, where better margins are available.

A market participant informed, "Odisha-based sellers were particularly active in domestic deals, capitalizing on the local price advantage over seaborne transactions. Domestic buyers are offering better prices, making them a more attractive option for pellet manufacturers."

Overall, the lack of improvement in seaborne inquiries and low export prices led most sellers to adopt a wait-and-watch approach, hoping for better values to resume transactions. For the time being, domestic markets remain the primary focus for many pellet exporters.

Pellet inventories at major ports in China reduced by 0.45 mnt w-o-w to 3.95 mnt on 26 December, according to SteelHome data.

Rationale

• No deals were recorded this week for T1 trade. Thus, this category was not taken into consideration for today's price calculations and accorded 0% weightage in the index calculation. Click here for detailed methodology.
  
  
• Seven (7) indicative prices were received, and five (5) were considered for the calculation of the index and given a 100% weightage.
  
  

Factors impacting pellet exports

• Chinese iron ore fines prices down w-o-w: The benchmark iron ore fines index inched down by $1/t w-o-w to $100/t CFR China on 31 December. Reportedly, strong demand for low-grade fines limited miners' scope for providing discounts. With mills' restocking mostly complete, high-grade seaborne cargo demand remained weak, which shifted focus to port stockpiles and kept high-grade premiums under pressure.
  
  
• DCE iron ore futures down w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for the January 2025 contract inched down by RMB 4/t ($1/t) w-o-w to RMB 779/t ($107/t) on 31 December. On a d-o-d basis, futures remained largely stable.
  
  
• China's portside pellet prices drop w-o-w: Chinese sources said that Qingdao's portside offers for Indian pellets (Fe 63.5%) fell by RMB 5/t ($1/t) w-o-w to RMB 935/t ($130/t) on 31 December, inclusive of all import taxes and port charges.
  
  

Outlook

According to BigMint's estimates, pellet export prices are expected to stay range-bound due to reduced seaborne purchases by Chinese mills. However, domestic realization is still better than the export therefore chances are rare if sellers consider export in the coming weeks.