Indian pellet export index increases by $4/t following global uptick

SteelMint's pellet export index (FOB east coast India) has increased by $4/t on a weekly basis and stands at $136/t on 18th Nov'20. Pellet export index has increased as demand for pellet is increasing gradually in China amid falling pellet inventories at Chinese ports. Not many active export offers were heard from India this week too amid getting high realization in the domestic market.

Availability of high-grade iron ore in Odisha's merchant market has resulted in consecutive price hikes by miners. At the same time domestic pellet prices in India are already trading at all-time high.

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 four indicative prices (T2) and they were taken into consideration with an average price of $136/t FOB India.

Spot iron ore fines price up by $3 w-o-w- Chinese spot iron ore fines (Fe 62%) increased by around $3/t on weekly basis and stood at $ 126.15/t CFR China yesterday against $123.3/t a week before.

• Pellet inventories in Chinese ports fall - Pellet inventory at major Chinese ports has decreased further last week by around 0.8 mn t to 9.1 mn t as per data maintained by Steelhome. However, few traders highlighted that Chinese steel mills are buying lumps for better cost efficiency and availability of lumps is also adequate at the ports.
  
  
• Indian pellet prices trading at all time high- Major pellet makers from Barbil increased offers in the domestic market this week backed by iron ore price hike. SteelMint's pellet price assessment from Barbil (Odisha) stands at INR 10,500-10,600/t (Loaded to wagon) this week, up by INR 1,300-1,600/t w-o-w.
  
  
• Odisha based merchant miners like Rungta & Essel Mining have further raised iron ore offers by INR 1,000-1,500/t this week. Essel Mining has announced a hike in iron ore fines and lumps price by INR 800/t today. Revised offers for Fe 62% fines from Koira stand at INR 6,075/t ex-mines, including Royalty, DMF & NMET.
  
  
• Realization in domestic & exports widens further - Pellet export is fetching realization lower by INR 1,900-1,950/t (around $25-26/t) than prevailing domestic offers, as per SteelMint's analysis. There seems to be a large gap between the domestic and export of pellet ex-plant realization. Hence, pellet makers are largely focussing on domestic sales