India: Pellet export prices up $7/t w-o-w on decent seaborne demand

• Domestic-export margin shrinks in last few days
  
  
• Chinese portside pellet inventory drops w-o-w
  
  

Indian pellet export prices have surged sharply in the past one week, driven by active deals in the seaborne market and demand for January delivery ahead of the Chinese New Year holidays. Market participants attribute this trend to the continuous positive movement in the global fines spot and futures index sentiment.

BigMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) rose by $6.5/t w-o-w to $104.5/t on 4 December 2024. Last week. An Eastern Indian seller concluded a 75,000 t pellet (Fe63%, max 8% Al2O3+SiO2) export cargo deal for December loading at $116-118/t CFR China. Another pellet producer concluded a 55,000-60,000 t pellet export deal at $116/t CFR China. As per sources, a few more deals are under negotiations and are likely to conclude in the coming days.

The gap between export and domestic realisations continued to narrow and is expected to stay closer in the coming days. Domestic prices are higher than export offers by INR 500-550/t ($6/t). Pellet (Fe63%) prices in Odisha's Barbil decreased by INR 200/t ($2.5/t) w-o-w to INR 7,450/t ($88/t) exw. Meanwhile, ex-plant realisation in exports from Barbil rose by INR 500/t ($6/t) w-o-w to INR 6,900/t exw ($81/t).

A market participant said: "Seaborne inquiries have remained steady, with pellet plants near ports actively pursuing export deals. In contrast, plants situated farther from the ports are focusing on the domestic market amid higher profit margins. While domestic sales continue to provide better returns for us, the current surge in demand makes export opportunities difficult to overlook."

In contrast, the Indian domestic market has witnessed a downturn in pellet prices in the central and eastern regions due to weak market sentiment and poor liquidity. Trades remained limited amid higher raw material prices and a downtrend in offers amid selling pressure.

A pellet seller based in eastern India informed: "Despite domestic challenges, market participants expect an increase in export deals in the coming days as restocking in China gains momentum. The Chinese market is improving with enhanced raw material demand, and we anticipate this trend to continue in the short term. Chinese buyers are actively restocking ahead of the holidays, creating significant demand for Indian pellets."

The upcoming Chinese economic meeting in December is expected to give a fillip to the seaborne market which may support Indian pellet export prices.

Pellet inventories at China's major ports decreased by 0.25 mnt to 4.9 mnt on 28 November compared to last week, according to Steelhome data.

Rationale

• The pellet export deal that was recorded in the last week has been considered in the last bi-weekly assessment. so it was not taken into consideration for today's price calculations and accorded 0% weightage in the index calculation. Click here for detailed methodology.
  
  
• Ten (10) indicative prices were received and six (6) were considered for calculation of the index and given a 100% weightage.
  
  

Factors impacting pellet exports

• China iron ore fines prices increase w-o-w: The benchmark iron ore fines index rose by $3$/t w-o-w to $106/t CFR China on 3 December following expectations of supportive macroeconomic policies in the near term. Seaborne trading liquidity remained strong, as major iron ore miners offered cargoes during yesterday's trading session. Market sentiment improved in anticipation of the Central Economic Work Conference, with potential stimulus measures expected to be announced.
  
  
• DCE futures up w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for the January 2025 contract rose by RMB 20/t ($3/t) w-o-w to RMB 812/t ($112/t) on 4 December. On a d-o-d basis, futures prices remained stable against yesterday's RMB 813.5/t ($112/t).
  
  
• Portside pellet prices in China rise w-o-w: Chinese sources said that Qingdao portside offers for Indian pellets (Fe 63.5%) increased by RMB 15/t ($2/t) w-o-w to RMB 960/t ($133/t) on 4 December, inclusive of all import taxes and port charges.
  
  

Outlook

According to BigMint estimates, pellet seaborne market are expected to trend upward and a few more deals may be witnessed by Indian sellers.