India: SteelMint's pellet export index rises to 1.5-year high on global price surge

SteelMint's India pellet (Fe 63%, 3% Al) export (FOB east coast) index increased by $3/t w-o-w to $128/t on 15 November, 2023. The pellet export index has increased to 1.5-year high, it was last seen at this rate in May 2022. One deal of 60,000 t of pellets was recorded by SteelMint from eastern India-based players at $138-139/t CFR China in this publishing window.

The Indian pellet export market remained optimistic this week. Few pellet producers preferred to sell material in export market as domestic trade activities remained sluggish amid festivals. As per sources, some producers getting inquires regularly but they were holding offers in anticipation of some more hike in prices as steel demand in China is likely to improve in the quarter.

However, pellet offers in the domestic market also increased, but buyers remained on the sidelines due to fall in sponge prices. The raw pellet demand in domestic market was on lower side and booked quantity also remained sluggish.

A few sources informed SteelMint, "Though the pellet export bookings have been done aggressively since past 2-3 weeks at the decent rate and quantity resell demand in China is not that active. Also, rake availability issues in eastern India have slightly slowed down the fresh export bookings".

Rationale:

• One (1) deal of pellet was recorded this week and taken into consideration. It was given 50% weightage in index calculation Click here for methodology.
  
  
• Twelve (12) indicative prices were received, and eleven (11) were considered for calculation of the index, and given 50% weightage.
  
  

Market highlights:

• Export realisation better than domestic: Domestic pellet (Fe 63%) prices inched up by INR 100/t w-o-w to INR 8,350/t loaded onto wagon in Barbil, eastern India. On the other hand, SteelMint's pellet export ex-plant price realisation for the Barbil region was stable at around INR 9,000/t exw this week. Thus, the export realisation is currently higher by INR 700-800/t compared to domestic.
  
  
• Global iron ore prices rise: The benchmark Fe62% fines index improved by $4/t w-o-w to $130/t CFR China on 15 November. Iron ore prices rose amid a few trades being concluded across the regions. As per report, there were numerous seaborne purchasing activities observed, primarily focused on low and medium-grade iron ore fines in addition to high steel production levels, also supported the buying activities.
  
  
• DCE iron ore futures rise: Iron ore futures on the Dalian Commodity Exchange (DCE) for January 2024 contract increased by RMB 36.5/t ($5/t) to RMB 971.5/t ($134/t) on 15 November compared to RMB 935/t ($129/t) on 8 November. Prices inched up by RMB 6/t ($1/t) d-o-d.
  
  
• Port inventories in China fall: Pellet inventories at China's major ports decreased by 0.1 mnt to 3.9 mnt on 9 November compared to 2 November.
  
  

Outlook:

The pellet export market is likely to remain supportive in the coming days as demand is expected to increase for Indian pellets amid positive sentiments from China.