SteelMint: India pellet export index inches up, market quiet on higher domestic realisations

SteelMint's India pellet (Fe 63%, 3% Al) export (FOB east coast) index edged up by $1/t w-o-w to $114/t on 20 September, 2023. No deal was reported from pellet makers in this publishing window.

As per sources from the next weekend, the Chinese market will be completely shut down due to Chinese mid Autumn festive Holidays (Golden week holidays) for the next few days, so Indian sellers are more reliable on domestic trades.

As per eastern India-based pellet manufacturers, they are getting a wide margin gap between domestic and export offers, so currently prefer the local buyers to sell the material. The domestic pellet prices in the central-eastern region of India increased post-OMC iron ore auction concluded recently this week amidst hike in bids.

Few plants from Odisha supplied material to western India-based steelmakers through the coastal route as per the SteelMint sources.

Rationale:

• No deal of standard-grade pellets was recorded this week and not taken into consideration. It was given 0% weightage in index calculation. Click here for methodology
  
  
• Nine (9) indicative prices were received, and seven (7) were considered for calculation of the index, and given 100% weightage.
  
  

India's pellet export shipments stood at 115,500t in the second week of September compared to 54,670 t in the first week of September, as per vessel line-up data maintained with SteelMint.

Market highlights:

• Export-domestic price gap decline: Domestic pellet (Fe 63%) prices stood at INR 9,500/t loaded onto wagon in Barbil, eastern India, rising by INR 800/t w-o-w. On the other hand, SteelMint's pellet export ex-plant price realization for the Barbil region also increased to INR 7,800-7,850/t exw this week. The gap declined to INR 1,400-1,500/t w-o-w but still fetching healthy return in domestic market.
  
  
• Global iron ore prices stable: The benchmark Fe 62% fines index remained stable w-o-w at $123/t CFR China on 19 September. However, prices fell at the start of this week despite numerous transactions and strong demand in the seaborne market. The restocking activities in advance of the "Golden Week" holiday period contributed to strong market liquidity, but the price drop reflects a typical price correction from the recent week's high prices.
  
  
• DCE iron ore futures rise: Iron ore futures on the Dalian Commodity Exchange (DCE) for January 2024 contract increased by RMB 13.5/t ($2/t) w-o-w to RMB 873.5/t ($120/t) on 20 September compared to RMB 860.5/t ($118/t) last week. Prices increased by RMB 11/t ($2/t) d-o-d.
  
  
• China pellet port inventories sharply down: Pellet inventories at China's major ports decreased by 0.6 mnt to 4.6 mnt on 14 September compared to the previous week.
  
  

Outlook:

Export prices may remain volatile as Chinese market participants will be out of market next week for Golden holidays.