SteelMint: India pellet export index climbs to two-month high on active deals

SteelMint's India pellet export index (Fe 64%, 3% Al, FOB east coast) rose by $9.5/tonne (t) on a w-o-w basis to $146/t. Amid the rise in global iron ore prices, the market saw a resumption in trades. The index rose to a two-month high, as per data maintained with SteelMint.

SteelMint recorded confirmed deals of over 400,000t pellet export in the last one week.

Rationale:

• Seven deals were concluded in last one week but only one deal of 55,000t Fe 63% pellets was included in the calculation. Hence, after grade adjustment taken under price calculation, the weightage given was 50%.
  
  
• Eleven (11) indicative offers and bids were received, and ten (10) were considered for calculation of the index, given a weightage of 50%.
  
  

Traders continue to remain active in the market anticipating a price hike in the coming days which has kept the Indian pellet export market active.

Global iron ore prices rise: Global iron ore prices extended gains this week aided by greater seaborne liquidity and expected supply constraints. The spot price of benchmark iron ore Fe 62% fines moved up by around $7/t w-o-w to $129/t CFR China on 11 Jan.

DCE iron ore futures' May'22 contract closed today at RMB 737.5/t ($115.86/t), up RMB 43.5/t ($6.83/t) w-o-w.

Iron ore miner Vale SA has partially halted production in its Southeastern and Southern Systems to guarantee safety of its employees and communities due to heavy rainfall in Brazil's Minas Gerais region. Vale's Northern System continues to operate in line with the production plan, which considers the impact of the rainy season on mining operations. Vale's production guidance for 2022 stands at 320-335 mn t .

Port inventories largely stable - Pellet inventory at China's major ports was recorded at 4 mn t on 6 Jan'22.

Domestic pellet prices rise on higher exports: As per SteelMint analysis, pellet (Fe 64%, 3% Al) ex-plant realisation in exports is assessed at INR 8,700-8,800/t for Barbil, eastern India. Indian pellet players have raised domestic pellet offers this week on the hike in export prices and sponge price rally. SteelMint's domestic price assessment for the Barbil region stood at INR 9,700/t loaded to wagon.