India: Pellet export prices rise by $5/t w-o-w, export deals yet to be concluded

• Pellet export prices up in east coast, deals absent
  
  
• Global fines spot, futures push up indices w-o-w
  
  

Pellet export prices in the Indian seaborne market improved over the past few days, following an uptick in global iron ore fines spot and future indices. However, demand from the Chinese market remains subdued due to significant bid-offer disparities.

BigMint's India pellet (Fe 63%, 3% Al) export index (FOB eastern coast) rose by $5/tonne (t) w-o-w to $99/t on 15 January 2025. No deal was recorded from India's east coast over the course of the week.

Indian exporters are holding back on concluding export deals, hoping for further price improvements. A trader reported that sellers are currently offering pellets at $115/t CFR, which is significantly higher than the bids placed for East Coast material. This gap has led to limited transactions in the export market.

The gap between export and domestic realisations slightly narrowed this week amid an improvement in export offers against stable domestic ones. Domestic prices exceeded export offers by INR 950/t ($11/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 6,600/t ($76/t) exw.

Market participants are closely watching NMDC's pellet export tender, which is scheduled for tomorrow. A trader informed, "A successful conclusion to NMDC's export tender could enhance market sentiment and stimulate increased activity. Meanwhile, some sellers from the east coast chose to pursue coastal deals for January 2025, due to the weak performance of the export market.'

While market sentiment remains cautious, a successful tender outcome and improving global indices could offer much-needed support to Indian pellet exporters in the coming days.

A seller commented: "Despite the current challenges, we anticipate a price rebound before the Chinese market closes for the Lunar New Year holidays. With most Chinese mills completing their January restocking, an increase in demand is expected in February, after the holiday period."

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 Seven (7) were considered for the calculation of the index and given a 100% weightage.
  
  

Factors impacting pellet exports

• Chinese iron ore fines prices up w-o-w: The benchmark iron ore fines index rose by $4/t w-o-w to $101/t CFR China on 14 January. Prices remained northward amid improved steel mill margins following lower coking coal and coke costs. Strong demand for medium- and low-grade sintering fines continued, aided by mild winter weather, which sustained construction activity in northern China.
  
  
• DCE iron ore futures rise w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for the January 2025 contract increased by RMB 35/t ($5/t) w-o-w to RMB 782.5/t ($107/t) on 15 January. On a d-o-d basis, futures remained firm.
  
  
• China's portside pellet prices up w-o-w: Chinese sources said that Qingdao's portside offers for Indian pellets (Fe 63.5%) rose by RMB 20/t ($3/t) w-o-w at RMB 955/t ($130/t) on 15 January, inclusive of all import taxes and port charges.
  
  

Outlook

According to BigMint's estimates, pellet export prices are expected to remain volatile following the lack of deals in the sea market. Market sentiments may improve if any deals get concluded in the coming days ahead of the Lunar holidays.