SteelMint: India pellet export index edges down amid declining global iron ore prices

SteelMint's India pellet (Fe 63%, 3% Al) export index FOB east coast edged down by $5/t w-o-w to $97/tonne (t) on 24 May. India pellet export index down amid declining global iron ore prices the index. The trading activty remained dull amidst less firm bids.

Demand for pellets and other high-quality raw materials used in the production of steel was sluggish due to muted demand in China. Buyers are mostly preferring to buy from the portside market against the seaborne market.

An Indian pellet producer said, "Owing to weak domestic and international demand, no one is ready to sell as suppliers are getting better realisation in the domestic market."

Pellet export shipments fall

India's pellet export shipments were recorded at 60,000 t in the third week of May in comparison with 198,544 t in the second week of the month, as per vessel line-up data maintained with SteelMint.

Rationale

• No deal was recorded this week and thus given 0% weightage in the index calculation.
  
  
• Eight (8) indicative offers and bids were received, and all were considered for calculation of the index, and given 100% weightage.
  
  

Market highlights

• Export realisations lower than domestic: Domestic pellet (Fe 63%) prices stood at INR 8,200-8,300/t loaded on to wagon for Barbil, eastern India. On the other hand, SteelMint's pellet export ex-plant price realisation for the Barbil region decreased by INR 200-400/t w-o-w to INR 6,200-6,300/t this week.
  
  
• Global iron ore prices fall w-o-w: The benchmark Fe 62% fines index fell by $6/t w-o-w to $102.4/t CFR China on 23 May as against $108.4/t a week ago. Little seaborne trade activity and ongoing volatility in downstream steel demand exerted pressure on iron ore prices. It has been learned that shaky import margins have reduced the frequency of seaborne trade.
  
  
• DCE iron ore futures fall sharply: Iron ore futures on the Dalian Commodity Exchange (DCE) for September 2023 contract closed at RMB 682.5/t on 17 May (at 3 pm), decreasing by RMB 65/t ($9/t) against RMB 747.5/t on 10 May. Prices decreased by RMB 24.5/t d-o-d.
  
  
• China pellet port inventories stable: Pellet inventory at China's major ports stood at 7.25 mnt on 18 May, stable w-o-w.
  
  

Outlook

India's pellet export price outlook remains gloomy due to sluggish demand in China. There is a wide price disparity between Chinese buyers and Indian sellers.