India: SteelMint's pellet export index touches 6-month high, deals amounting to 0.35 mnt concluded

SteelMint's India pellet (Fe 63%, 3% Al) export (FOB east coast) index increased by $7.5/t w-o-w to $115.5/t on 18 October, 2023. The index was recorded at a six-month high, with current price levels last seen in the last week of March 2023, as per SteelMint assessment. Around 350,000 t of pellet export deals were recorded by SteelMint in this publishing window.

The Indian pellet export market was optimistic this week as trades were concluded from major mills. However, some deals were under negotiations but were not concluded at the time of publishing this article.

According to an eastern India-based pellet-maker, "The domestic pellet market was under pressure due to low demand for sponge iron and finished steel during the festive season. But we have concluded deals in the export market at comparatively better offers. Buyers' response was good after a gap of one week when participants returned from the Golden Week holidays."

On the other hand, the Chinese market was aggressive after the holidays as participants booked material amid low inventories at ports.

Rationale:

• Three (3) confirmed deals of standard-grade pellets were recorded this week and all were taken into consideration. It was given 50% weightage in index calculation Click here for methodology.
  
  
• Nine (9) indicative prices were received, and seven (7) were considered for calculation of the index, and given 50% weightage.
  
  

India's pellet export shipments stood at 245,284 t in the second week of October compared to 171,600 t in the first week of October, as per vessel line-up data maintained with SteelMint.

Market highlights:

• Domestic-export price gap shrinks: Domestic pellet (Fe 63%) prices remained stable w-o-w at INR 8,550/t loaded onto wagon in Barbil, eastern India. On the other hand, SteelMint's pellet export ex-plant price realisation for the Barbil region also increased to around INR 8,000/t exw this week. The gap has shrunk to around INR 250/t w-o-w.
  
  
• Global iron ore prices rise w-o-w: The benchmark Fe62% fines index increased by $6/t w-o-w to $120/t CFR China on 17 October. Iron ore fines spot prices rose due to firm buying activities amid high operational rates of Chinese steel mills. Although there were negative production margins for certain finished steel products, the majority of Chinese steel mills reported high utilisation rates. Healthy import margins encouraged traders to engage in seaborne purchases.
  
  
• DCE iron ore futures rise: Iron ore futures on the Dalian Commodity Exchange (DCE) for January 2024 contract increased by RMB 33.5/t ($5/t) to RMB 861/t ($118/t) on 18 October compared to RMB 827.5/t ($113/t) on 11 October. However, prices inched down by RMB 5/t ($1/t) d-o-d.
  
  
• Port inventories fall: Pellet inventories at China's major ports decreased by 0.3 mnt to 4 mnt on 15 October compared to the previous week. Inventory was recorded at its lowest level in the last one-and-a-half years, with current levels last seen in the first week of January 2022.
  
  

Outlook:

Export prices are expected to remain competitive as inventory levels have declined in China and demand for raw pellets has increased after the holidays.

Note: * indicates the deal details of qty and prices mentioned have been updated.