India: Pellet export prices rise on global iron ore recovery, trades mute

SteelMint's India pellet export index (Fe 64%, 3% Al, FOB east coast) increased by $22/t, w-o-w, to $122/t. Pellet exports prices have increased for the week amid rising spot iron ore prices.

"There is renewed interest in pellets but no deals were heard in the market as export realisations are still lower than domestic offers. Deals are expected to happen only after the Chinese holidays scheduled in the first week of Oct", shared a pellet maker.

KIOCL has issued an export tender for Fe 63% (2% Al) pellets. The tender, due on 30 Sep, is solely for KIOCL's empanelled customers. The minimum quantity offered is 55,000 t. KIOCL operates a 3.5 mn t/year pellet plant in Mangalore, Karnataka.

"A few pellet players are offering standard grade pellets at $170/t CFR China but we are yet to observe firm buying interest. Price indications currently could be around $150/t CFR levels", highlighted a trader.

As per data maintained with SteelMint, total pellet exports from Indian ports for the week (19-25 Sep) were nil as against 126,760 t a week ago.

Rationale:

• No deals were heard concluded for China in the current publishing window. Hence, the weightage given is 0%.
  
  
• Eight (08) indicative offers and bids were received, and six were considered for calculation of the index, given a weightage of 100%.
  
  

Market highlights

• Spot iron ore prices up $18.35/t, w-o-w: The spot price of iron ore benchmark Fe 62% fines increased by $18.35/t on 28 Sep to $112.35/t CFR China as against $94/t assessed a week ago. However, the prices edged lower by $6.30/t on 28 Sept'21 on uncertain demand outlook due to power curbs in China as well as curbs on steelmaking. Market sources informed SteelMint that many steel mills are undertaking maintenance works and reducing operating hours amidst the government's power rationing measures.
  
  
• DCE iron ore futures up: Dalian iron ore futures picked up on 29 Sep after witnessing a brief fall yesterday amidst concerns over Chinese power curbs. DCE iron ore futures Jan'22 contract closed at RMB 694/t ($107) (+RMB 16)
  
  
• Pellet inventory in China down, w-o-w: Total pellet inventory at China's major ports was recorded at 4 mn t towards last week as against 4.1 mn t a week ago.
  
  
  
• Domestic pellet prices down, w-o-w: SteelMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, fell by INR 150/t to INR 10,900/t DAP Raipur on 28 Sep. Competitive offers from other states to Raipur kept prices under pressure.
  
  
• KIOCL under maintenance shutdown: KIOCL has undertaken temporary shutdown of its pellet plant from 20 Sep for rectification of the indurating machine alignment, major repairs and other maintenance works. The plant is expected to resume operations after six weeks. KIOCL has a 3.5 mn t/year pellet plant at Mangalore in Karnataka which produced 2.21 mn t of pellets in FY'21.