India: SteelMint's pellet export index range-bound in recent trades

SteelMint's India pellet (Fe 63%, 3% Al) export index FOB east coast inched down by $1/t w-o-w to $108/t on 5 July 2023. After some deals were reported during the end of last week, no fresh deals were heard this week.

Several regions of China are experiencing rain, thus there is a low demand for steel which impacts pellet imports from Chinese users. In spite of greater portside inventories, some traders were wary of the price trend and are adopting a wait-and-watch approach. Price disparities between buyers and sellers were also seen as the bid was given by sources.

Export deals

• An Odisha-based pellet producer concluded a deal for 55,000 t (Fe 63%, 3% alumina) at $118-119/t CFR China towards the end of last week for July shipments.
  
  
• In another deal, an Odisha-based pellet producer concluded two more deals of a total of 110,000 t (Fe 62+/0.5%) at $117-118/t CFR China last week. However, deals were not confirmed by SteelMint at the time of publishing this insight.
  
  

Pellet exports from Indian ports rise

India's pellet export shipments were recorded at 275,700 tonnes (t) in the last week of June compared to 55,000 t in the fourth week of June, as per vessel line-up data maintained with SteelMint.

Rationale

• One deal was recorded this week and was taken into calculation. Thus, given a 50% weightage in the index calculation.
  
  
• Eight (8) indicative offers and bids were received, and seven (7) were considered for calculation of the index, and given a 50% weightage.
  
  

Market highlights

• Gap between realisations in export and domestic narrows down: Domestic pellet (Fe 63%) prices stood at INR 7,700/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 narrowed against INR 700-800/t seen last week.
  
  
• Global iron ore prices fall: The benchmark Fe 62% fines index decreased by $3.45/t w-o-w to $110.5/t CFR China on 4 July. Tangshan steelmakers were instructed to scale down production until the end of the month impacting supply of raw materials. However, steel production margins have improved but some steel mills in China were concerned about weak steel demand expectations.
  
  
• 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 2.5/t ($1/t) w-o-w to RMB 828/t ($114/t) on 5 July (at 3 pm) as compared to RMB 830.5/t ($115/t) on 28 June. Prices increased by RMB 7/t ($1/t) d-o-d compared to RMB 821/t ($113/t) on 4 July.
  
  
• China pellet port inventories rise w-o-w: Pellet inventories at China's major ports remained stable at 7 mnt on 30 June. However, inventories have risen quite significantly against 5.25 mnt at the beginning of calendar year 2023 (CY23).
  
  

Outlook

Pellet export prices may remain volatile amidst mixed sentiments from the Chinese market and low steel demand. Currently, there are only some buyers showing interest in the seaborne pellets.