India: Pellet export prices drop $2/t w-o-w amid lacklustre demand
...
- No deals seen in Indian seaborne market
- Global fines spot, future indices drop w-o-w
The pellet export market remained rangebound this week amid limited seaborne inquiries. According to market participants, high inventory at the Chinese attract Chinese mills for their restocking ahead of the Lunar New Year holidays, resulting in subdued demand for seaborne pellet market.
BigMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) fell by $1.5/t w-o-w to $100/t on 18 December 2024. This week, no confirmed deal was recorded in this publishing window. The recent lacklustre buying interest from seaborne buyers weighed on Indian pellet export deals.
A market participant commented, "Indian sellers are currently adopting a wait-and-watch approach, hoping for improved price opportunities to finalize new export deals. The export market has slowed down significantly, and inquiries for premium material have reduced over the last few days. Additionally, high pellet inventory levels at Chinese ports, and mills opting for cheaper raw material alternatives, have further dampened export demand."
The gap between export and domestic realizations widened this week amid a drop in export prices against domestic ones. Domestic prices are higher than export offers by INR 950/t ($12/t). Pellet (Fe63%) in Odisha's Barbil remained largely stable w-o-w at INR 7,500/t ($89/t) exw. Meanwhile, ex-plant realization in exports from Barbil stood at INR 6,550/t exw ($79/t).
The domestic market, however, continues to show resilience with better price realizations compared to exports. Sellers are focusing on coastal domestic movement, leveraging stronger local demand, while others remain cautious, waiting for clarity on export prices.
Indian sellers are also keenly monitoring the outcome of today's Odisha Mining Corporation (OMC) auction to reassess production costs. While some export deals remain under negotiation, no significant transactions have been concluded yet.
Another market participant said: "There is a significant mismatch in bid and offer levels, which has led to a drop in export volumes. Sellers remain hopeful of market improvements in the near term."
Pellet inventories at major ports in China remained stable at w-o-w at 4.4 mnt on 12 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.
- Eight (8) indicative prices were received, and four (4) were considered for the calculation of the index and given a 100% weightage.
Factors impacting pellet exports
- Chinese iron ore fines prices range-bound w-o-w: The benchmark iron ore fines index inched down $1/t w-o-w to $105/t CFR China on 17 December. Prices fluctuated due to abundant portside inventories and increased preference for cost-effective alternatives that offer favourable specifications. Blending options and weak buying interest for seaborne cargoes arriving during the Lunar New Year further dampened demand, softening premiums for the latter.
- DCE iron ore futures down w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for the January 2025 contract fell by RMB 23.5/t ($3/t) w-o-w to RMB 778.5/t ($107/t) on 18 December. On a d-o-d basis, futures prices significantly fell by RMB 18/t ($2.5/t) against yesterday's RMB 796.5/t ($109/t).
- Portside pellet prices in China drop w-o-w: Chinese sources said that Qingdao's portside offers for Indian pellets (Fe 63.5%) fell by RMB 15/t ($2/t) w-o-w to RMB 950/t ($130/t) on 18 December, inclusive of all import taxes and port charges.
Outlook
According to BigMint's estimates, the Indian pellet export market is anticipated to remain volatile in the coming days. Market participants are still expecting another round of restocking activity in China at the end of December, which may drive Indian pellet export prices higher in the near future.
