India: SteelMint's pellet export index range-bound in absence of active trade

SteelMint's India pellet (Fe 63%, 3% Al) export index FOB east coast inched down by $1/t w-o-w to $107/t on 12 July, 2023. No deals were heard in this publishing window.

Pellet prices remained steady due to lack of market clarity on price direction in the face of slow demand. It was expected that pellet export trades may remain volatile in monsoon.

Pellet exports from Indian ports fall

India's pellet export shipments were recorded at 218,079 tonnes (t) in the first week of July compared to 275,700 t in the last week of June, as per vessel line-up data maintained with SteelMint.

Rationale

• No deal was recorded this week and was not taken into calculation. Thus, given a 0% weightage in the index calculation.
  
  
• Ten (10) indicative offers and bids were received, and nine (9) were considered for calculation of the index, and given a 100% weightage.
  
  

Market highlights

• Export realisation remains stable this week: Domestic pellet (Fe 63%) prices stood at INR 7,650/t loaded on to wagon for Barbil, eastern India. On the other hand, SteelMint's pellet export ex-plant price realisation for the Barbil region increased to INR 7,300/t exw this week. The gap has remained stable.
  
  
• Global iron ore prices fall: The benchmark Fe 62% fines index decreased by $2.9/t w-o-w to $107.6/t CFR China on 11 July. Some trade activities for medium-grade fines were seen in the seaborne market owing to better import margins. Meanwhile, the news of the sintering reduction impacted trade in north China, as seen by lower buying activity.
  
  
• DCE iron ore futures largely stable w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for September 2023 contract inched down by RMB 3/t ($1/t) w-o-w to RMB 825/t ($115/t) on 12 July (at 3 pm) as compared to RMB 828/t ($115/t) on 6 July. Prices increased by RMB 18/t ($2/t) d-o-d.
  
  
• China pellet port inventories fall w-o-w: Pellet inventories at China's major ports decreased by 0.3 mnt to 6.7 mnt on 6 July. However, inventories have risen quite significantly against 5.25 mnt at the beginning of the calendar year 2023 (CY23).
  
  

Outlook

China extended two financial policies supporting stable and healthy development of the real estate market to the end of 2024, released by the People's Bank of China and the National Administration of Financial Regulation.

However, market participants mentioned that lower iron ore futures, the absence of pellet export tender conclusion from Indian players may keep the market slow.