India: SteelMint's pellet export index rises by $2/t w-o-w

SteelMint's India pellet (Fe 63%, 3% Al) export (FOB east coast) index increased by $2/t w-o-w to $111/t on 6 September, 2023. Not many deals were heard this week owing to bid-offer disparities from China. However, market sentiments have improved this week comparatively as some pellet makers received offers from buyers end. As per reports, sintering cuts announcement made the portside activity low however few started restocking.

A South India-based pellet maker had floated two export tenders for 100,000 t of material (Fe 63-64%; Al2O3+SiO2 7-8%) in this publishing window. As per sources, one tender was heard concluded at around $119/t FOB last weekend while other one was concluded at $122-123.5/t FOB in the start of this week.

Despite active deals, pellet makers are getting better realization in the domestic market as steel and raw material demand increased.

Rationale:

• No deal of standard-grade pellets was recorded this week and was not taken into consideration. It was given 0% weightage in index calculation.
  
  
• Eight (8) indicative prices were received, and Seven (7) were considered for calculation of the index, and given 100% weightage.
  
  

Market highlights:

• Gap between export-domestic prices widens: Domestic pellet (Fe 63%) prices stood at INR 8,900/t loaded on to wagon in 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 between the two increased further by INR 1,250/t w-o-w.
  
  
• Global iron ore prices rise: The benchmark Fe 62% fines index increased by $5/t w-o-w to $119/t CFR China on 5 September. Iron ore (Fe 62%) fines prices supported by decent import margin. As imported cargoes are more cost-competitive than purchase made from portside, persistent import margins continue to catch some people's interest. As per reports, sintering cuts announcement made the portside activity low however few started restocking.
  
  
• DCE iron ore futures rise: Iron ore futures on the Dalian Commodity Exchange (DCE) for January 2024 contract increased by RMB 24.5/t ($3/t) w-o-w to RMB 853.5/t ($117/t) on 6 September compared to RMB 829/t ($113/t) last week. On a d-o-d basis, prices increased by RMB 7/t ($1/t) d-o-d.
  
  
• China pellet port inventories edge up w-o-w: Pellet inventories at China's major ports increased by 0.1 mnt to 5.6 mnt on 31 August compared to the previous week.
  
  

However, India's pellet export shipments stood at 120,450 tonnes (t) in the last week of August compared to 174,720 t in the third week of August, as per the vessel line-up data maintained with SteelMint.