India's pellet export index edges down on lower bids, Chinese steel production cuts

China's ongoing National Development and Reform Commission's (NDRC's) checks and steel output cuts in China have continued to weigh down sentiments in India's pellet exports market. India's pellet (Fe 63%, 3% Al) export index (FoB east coast) decreased $3/t w-o-w to $158/t on 20 April, 2022 from $161/t on 13 April.

Rationale

• One eastern India-based deal was reported this week. It was heard concluded for 55,000t (Fe 63%, 3% Al) at $178/t CFR China and was considered under T1 trade and hence the weightage given was 50%. Click here for methodology.
  
  
• Eight (08) indicative offers, and bids were received, and six (06) were considered for calculation of the index, given 50% weightage.
  
  

The market is not very active at the moment. A couple of deals were heard to have been concluded from central and eastern India. Workable price levels for standard grade pellets were heard at $175-180/t CFR China.

"We are offering pellets at $180/t CFR China," commented an eastern India-based player. Surge in Covid cases and recent NDRC announcements to curb steel outputs in CY22 have weighed down India's pellet export market, sources highlighted.

China's NDRC has announced that crude steel output in CY22 will be lower in comparison with that of CY21. The reduction in capacity would be in the areas in and around Beijing, Tianjin, Hebei and the Yangtze river delta along with Shanxi and the Shaanxi plains. China's Q1CY22 steel production decreased by 10.5% y-o-y to 243.38 mnt.

Market highlights

• Domestic realisations higher than exports: As per SteelMint analysis, domestic pellet (Fe 63%, 3% Al) is assessed at INR 10,750/t ($140/t) loaded on to wagon for Barbil, eastern India. On the other hand, SteelMint's pellet export price on ex-plant basis for the Barbil region remains at around INR 10,600-10,700/t ($139-140/t) exw.
  
  
• Global iron ore prices fall w-o-w: The benchmark Fe62% fines index decreased by $5/t w-o-w on 19 April to $149.85/t CFR China. The prices decreased on a d-o-d basis following news released by the Chinese state planning body that it plans to reduce national crude steel production.
  
  
• DCE iron ore futures down w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for September contract closed today (at 3 PM) at RMB 898/t, down RMB 14/t ($2/t) as against RMB 884/t on 13 April, 2022. On a daily basis, prices decreased by around RMB 11/t ($2/t).
  
  
• Port inventories in China inch down w-o-w: Pellet inventory at China's major ports inched down to 4.95 mnt this week against 5.05 mnt a week ago.