India: Pellet export prices drop $2/t w-o-w amid lack of export transactions

• Pellet export market remains muted this week
  
  
• Global fines spot and future indices drop w-o-w
  
  

The seaborne pellet export market remains under pressure due to weak market sentiments and low buying interest from Chinese mills. Exporters have adopted a cautious approach as poor realizations in the export market have deterred active participation. Comparatively, the domestic market has shown resilience, with improved trading activity offering some relief to sellers.

BigMint's India pellet (Fe 63%, 3% Al) export index (FOB eastern coast) fell by $2/tonne (t) w-o-w to $94/t on 8 January 2025. No deal was recorded from India's east coast over the course of the week.

Market participants noted that no seller is willing to entertain prices below $113-115/t CFR for export transactions. A south Indian pellet producer recently floated an export tender for 50,000 tonnes of pellets, with bids reported at $105-106/t FOB India. However, confirmation of the transaction details remains pending.

The gap between export and domestic realizations widened this week amid a drop in export offers against stable domestic ones. Domestic prices exceed export offers by INR 1,350/t ($16/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 6,200/t ($72/t) exw.

A trader commented: "The export market is not viable at the current prices, and domestic sales are yielding better returns. Sellers are understandably hesitant."

Some exporters are holding out for better prices, anticipating a shift in Chinese buying trends. Until that happens, the domestic market will likely remain the preferred choice for producers due to its relative stability.

Another market source highlighted the reduced appetite from Chinese mills, stating, "Most mills have already restocked, and their focus has shifted to lower-grade iron ore fines. Pellets are not a priority for now."

Pellet inventories at major ports in China inched up by 0.1 mnt w-o-w to 4.05 mnt on 2 January, 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 dropped by $3/t w-o-w to $97/t CFR China on 7 January. Trading activity slowed amid weak fundamentals ahead of the Lunar New Year holidays, and seaborne demand is not expected to improve. Consequently, low-grade and discounted products will likely remain the most cost-effective options for end-users. As per reports, raw material prices and margins may remain low.
  
  
• 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 21.5/t ($3/t) w-o-w to RMB 747.5/t ($102/t) on 8 January. On a d-o-d basis, futures remained largely stable.
  
  
• China's portside pellet prices stable w-o-w: Chinese sources said that Qingdao's portside offers for Indian pellets (Fe 63.5%) remained largely stable w-o-w at RMB 935/t ($130/t) on 8 January, inclusive of all import taxes and port charges.
  
  

Outlook

According to BigMint's estimates, pellet export prices are expected to remain volatile amid the higher fluctuation in the global fines index.