Indian Pellet Export Margins Rise USD 24 in Last Five Months

With rising iron pellet premium and strong overseas demand, Indian pellet manufacturers are having best of their time.

Indian pellets exports offers have observed an uptrend amid improved demand from Chinese and South Korean steel mills. Due to strict governmental regulations in China, limited offers and announcement of capacity cut ahead of the schedule, strong demand for Indian pellets was seen from overseas buyers.

Indian pellet export reference price assessment of SteelMint has surged from monthly average of USD 100/MT, FoB India in Apr'18 to current assessment of USD 136-138/MT, FoB India this week. Thus a sharp hike in export prices is evident.

Spot pellet premium shoots up - Spot pellet premium for Fe 65% grade pellets assessed at USD 84.2/DMT, CFR China this week up by USD 7.35/DMT W-o-W against USD 76.85/DMT a week before. Pellet premium this week has reached record high levels which were hovering at USD 43/DMT CFR in Apr'18.

Pellets export margins almost double in last five months- As per SteelMint's analysis, pellet export margins of east India (Odisha) based pellet makers have increased sharply by to USD 53 in Aug'18 as against Apr'18 which was USD 29 then. Considering the average exchange rate for every month, pellet export realization has increased from INR 5,600/MT in Apr'18 to INR 8,000/MT in Aug'18. Cost of pellet production has increased from INR 3,600/MT in Apr'18 to INR 4,400/MT in Aug'18.

Thus pellet export realization has increased from INR 1,900/MT in Apr'18 to INR 3,600/MT in Aug'18.

Indian pellet export shipments increase in August- According to provisional data maintained with SteelMint, Indian Pellet export from India in Aug'18 is expected to be around 7% M-o-M to 0.6 MnT as against 0.56 MnT in Jul'18.