Indian Pellet Demand Improves in China; Prices Move Up

According to the market participants report to the SteelMint, Chinese mills are actively looking for Indian pellets cargoes due to strict govt. norms imposed on steel mills in Northern China. Also, trade sources highlighted less supply of Indian pellets has resulted in shortage with Chinese mills. As per the sources Indian pellet export price assessment stands at USD 116-118/MT, CFR China up by USD 4-6/MT, CFR China against last week.

However Indian pellets makers are not offering actively in exports because of following reasons-

1. Logistics issue in the eastern India-: Trade sources highlighted that plants are currently facing extremely low iron ore/pellet rake availability in the eastern region which has hampered material movement.

2. Monsoon Concerns-: Upcoming monsoon in India make domestic sponge manufacturers prefer pellets over iron ore, resulting in lower volumes for export.

3. Increase in domestic pellet offers -: Domestic pellet offers in India moved up sharply in May amid preference over iron ore. Pellets are getting better realization in the domestics market itself. Current offers are around INR 6,800/MT (in Durgapur) and INR 6,200/MT (loaded to wagons, Barbil).

However, increased Chinese demand and currency depreciation may lead to the increased interest of Indian pellet makers in near short term.

Few trade sources mentioned apart from Europe there are pellet inquiries coming up from Canada too.

At IOC, the revised guidance for 2018 production is 10.3 to 11.3 MnT of iron ore pellets and
Concentrates (previously 11.5 to 12.5 MnT). This adjustment assumes a vote in favor of the new
collective bargaining agreement and represents the loss of about one month's production. This could be the reason behind increased inquiries for Indian pellets from Canada.