Indian pellet export index increases around $5/t tracking global price gains

SteelMint's pellet export index (FOB east coast India) increased around $5/t this week. Index stood at $141/t on 2nd Dec'20. Indian major pellet makers have not been offering material for exports since past few weeks, considering higher realizations in domestic market. Demand from China remained firm due to less availability of Indian cargoes.

Rationale: No pellet export deal (T1) heard so far in this week and not considered for calculation of index. Therefore, weightage of T1 transferred to calculation of T2 inputs.SteelMint has received two indicative prices (T2) and all were taken into consideration with an average price of $141/t FOB India. Vessel freight rates from India to China has increased to around $11-11.5/t this week against $10/t a couple of weeks back.

• Spot iron ore fines price up by $4 w-o-w- Chinese spot iron ore fines (Fe 62%) increased by around $4/t on weekly basis and stood at $ 133.05/t CFR China yesterday against $128.15/t a week before.
  
  
• Pellet inventories in Chinese ports fall further - Pellet inventory at major Chinese ports have been decreasing from the last couple of weeks. Last week, inventories fell by around 0.35 mn t to 8.15 mn t as per data maintained by Steelhome.
  
  
• Indian domestic pellet prices stable w-o-w - Indicative prices from Barbil stable in the domestic market this week amid hike in sponge and billet prices. SteelMint's pellet price assessment from Barbil (Odisha) stands at INR 10,300-10,500/t (Loaded to wagon) this week.
  
  
• OMC iron ore lump auction bids increased up to INR 3,800/t ($ 52) - State-owned miner - Orissa Mining Corporation (OMC) in today's iron ore lump e-auction received an overwhelming response. Entire material offered for 910,000 t fetched bids with bids increasing upto INR 3,800/t over the set base price. The miner had raised base by upto INR 1,600/t against last auction's base price held on 1st Oct'20.
  
  
• Realization in domestic still lucrative than pellet exports - Pellet export is fetching realization lower by INR 1,200-1,300/t (around $16-17/t) than prevailing domestic offers, as per SteelMint's analysis. There seems to be quite a decent gap between the domestic and export of pellet ex-plant realization. Though exports offer has also been increased. Hence, pellet makers are largely focusing in the domestic market.