India: SteelMint's pellet export index remains range-bound

SteelMint's India pellet (Fe 63%, 3% Al) export index FOB east coast inched up by $1/t w-o-w to $108/t on 26 July, 2023. No deal was heard this week amid poor seaborne market sentiments and no inquiries from the Chinese market were heard in this publishing window.

Market participants were not getting offers in the export market. However, manufacturers are optimistic about the export market on Chinese macroeconomic tailwinds. The Chinese government would likely release more details of stimulus policies in the next few weeks. As per sources, the market is uncertain about evolving policies which impacted bids by buyers this week.

As per reports, China's Politburo stated during a long-awaited meeting that "strong support will be given to scientific and technological innovation, the real economy, and the development of micro, small, and medium-sized enterprises."

State-owned KIOCL has floated a tender for exports of 50,000 t of iron ore pellets (Fe63%, 8% Al2O3+SiO2). The due date for submission of bids is 14.00 hrs IST on 27 Jul'23 to 14.00 hrs IST on 28 Jul'23. The tender has been floated only for KIOCL's empanelled customers.

Pellet export shipments fall

India's pellet export shipments at Indian ports stood at at 112,000 tonnes (t) in the third week of July compared to 106,850 t in the second week, 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.
  
  
• Nine (9) indicative offers and bids were received, and seven (7) were considered for calculation of the index, and given a 100% weightage.
  
  

Market highlights-

• Gap between export-domestic realisation stable: Domestic pellet (Fe 63%) prices stood at INR 7,450/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 remained stable at INR 7,100-7,150/t exw this week. The price gap between the two are largely range-bound against last week.
  
  
• Global iron ore prices edge up: The benchmark Fe 62% fines index inched up by $0.9/t w-o-w to $116.75/t CFR China on 25 July. The seaborne market saw vigorous trading activity amid hopes of additional macroeconomic stimulus. The government would likely release more details about the stimulus programmes in the next few weeks. Meanwhile, the meeting mentioned engaging the capital market. As a result, several market sources have high hopes for iron ore demand.
  
  
• DCE iron ore futures rise: Iron ore futures on the Dalian Commodity Exchange (DCE) for September 2023 contract inched up by RMB 32/t ($4/t) w-o-w to RMB 866/t ($121/t) on 26 July (at 3 pm) as compared to RMB 834/t ($117/t) last week. Prices increased by RMB 9.5/t ($1/t) d-o-d
  
  
• China pellet port inventories largely stable: Pellet inventories at China's major ports slightly decreased by 0.1 mnt to 6.1 mnt on 20 July compared to the previous week.