Indian pellet export volumes rise w-o-w on falling Chinese port stocks

• Indian pellet export index up by $7/t w-o-w
  
  
• Deals of around 400,000 t reported from India in the last one week
  
  
• Pellet stocks at major Chinese ports have halved since Jan'21
  
  

SteelMint's Indian pellet export index (Fe 64% 3% Al, FoB east coast) has recorded a hike of around $7/t w-o-w and stands at $229/t. Seaborne pellet buying sentiments in China have improved further. According to deals tracked by SteelMint, confirmed trade of around 400,000 t of pellet have been concluded from India since the end of last week.

South India-based pellet-maker KIOCL had issued an export tender for sale of Fe 63% pellet with alumina content of 2-1.1%. The tender fetched an active response and was concluded at around $241/t, FoB, for 200,000 t, SteelMint learnt from sources. KIOCL's pellet export prices have risen to their highest levels since CY'09.

An export tender by an Odisha-based pellet player was due today for 55,000 t of Fe 65% grade material. The highest bid received was heard at $270/t, CFR China. However, this deal this could not be confirmed till the time of publishing this report.

India pellet exports deals:

Declining port stocks in China and a sharp hike in spot iron ore prices have supported the price hike. Even last week SteelMint reported confirmed pellet exports of 334,000 t from India.

Rationale:

• Four pellet export deals were concluded in this publishing window and three qualified for price calculation as T1 inputs and given the weightage of 50% in this index.
  
  
• Apart from trades, SteelMint has also received six (06) indicative prices, offers and all were considered as T2 trades and given a weightage of 50% in this index.
  
  

Key market highlights-

Spot iron ore prices rise - The spot price of iron ore rebounded on 8 Jun'21 as trading continued in the spot market. The price of Fe 62% iron ore fines jumped by $7.55 to $210.40/t, CFR China.

Falling inventories at Chinese ports - Pellet inventory at major Chinese ports decreased to 3.65 mn t last week, as per data maintained by SteelHome. Inventories are at the lowest level since SteelMint began maintaining data since Jul'20.

Freight rates remain stable- Freight rates for 50,000-55,000 t export vessels from east coast India (Paradip) to China were stable at $22-23/t compared to last week.

DCE iron ore futures rise-: Dalian Commodity Exchange (DCE) iron ore futures Sep'21 contract closed at RMB 1,175/t ($184) (+RMB 26 d-o-d).

Domestic pellet prices increase - SteelMint's bi-weekly domestic pellet index, "PELLEX" stood at INR 16,300/t, DAP Raipur. Indian pellet prices in all the key markets have remained stable this week; however, trades remained subdued on falling sponge iron prices. However, domestic prices may not see sharp a correction considering the decent export bookings that have been concluded.