SteelMint: India pellet export index remains range-bound in recent trade

Steelmint's India pellet export index (Fe 64%, 3% Al, FOB east coast) has remained range-bound at $127/t. However, export sentiments continue to remain subdued this week too.

In one confirmed deal, an eastern India-based player sold 75,000 t pellets (Fe 62.5%) at $135-140/t CFR.

State-owned pellet producer KIOCL had issued an export tender for one shipment (Fe 63%, alumina content 2%), as per SteelMint reports. The tender, due on 26 Nov'21, was only for KIOCL's empanelled customers. According to sources, the tender was cancelled. The company has floated a fresh tender which is due on 2 Dec.

Gap between domestic and export realisations

As per SteelMint analysis, Indian pellet ex-plant realisation is assessed at INR 7,500-7,600/t for Barbil (eastern India). On the other hand, SteelMint's domestic price assessment for the Barbil region stood at INR 8,800-9,000/t loaded to wagon, lower by INR 500-600/t w-o-w. Though the gap has narrowed, domestic realisations are higher and hence the preference for domestic sales remains higher compared to exports.

SteelMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, has fallen sharply to INR 9,650/t DAP Raipur on 30 Nov'21, lower by INR 700/t against the last assessment of INR 10,350/t on 26 Nov. PELLEX has dropped to one-year low as the same levels were last seen in Nov'20. Prices have corrected on lower bids and reduction in iron ore prices by NMDC and Odisha miners. NMDC cut iron ore prices by INR 200-870/t for Dec'21 deliveries.

Rationale:

• One confirmed deal was heard concluded in this publishing window. Hence, the weightage given was 50%.
  
  
• Six (6) indicative offers and bids were received, and all were considered for calculation of the index, given a weightage of 50%.
  
  

Market highlights:

• The spot price of benchmark iron ore Fe 62% fines increased to $100/t CFR China on 30 Nov, largely stable w-o-w. Liquidity in the seaborne market remains limited.
  
  
• DCE iron ore futures' Jan'22 contract closed at RMB 623/t ($98/t) (+RMB 9), d-o-d.
  
  
• Total pellet inventory at China's major ports was recorded at 4 mn t last week, down by 0.3 mn t w-o-w.