SteelMint: India pellet export index rises marginally due to higher domestic realisations

India's pellet export index (Fe 64%, 3% Al, FOB east coast) rose by $5/tonne (t) on a w-o-w basis to $151/t.

India's pellet export prices continue to show an upward momentum for yet another week, although higher domestic price realisations have turned a few suppliers away from exports towards the domestic market.

An eastern India-based producer concluded an export deal for 75,000 t of Fe 62.5% pellet (3.5% Al) at around $165-166/t CFR China this week.

Rationale:

• One deal concluded this week for Fe 62.5% pellet was included in the calculation. Hence, after grade adjustment taken under price calculation, the weightage given was 50%.
  
  
• Nine (09) indicative offers and bids were received, and six (06) were considered for calculation of the index, given a weightage of 50%.
  
  

Domestic realisations higher than exports - Not many Indian pellet producers are active currently in the market given higher domestic realisations. As per SteelMint assessment, pellet (Fe 64%, 3% Al) ex-plant realisation in exports is assessed at INR 9,100-9,200/t for Barbil, eastern India.

On the other hand, Indian pellet players have raised domestic offers this week on the hike in iron ore lump prices as well as sponge iron prices.

SteelMint's domestic assessment for prices in the Barbil region stood at INR 10,100/t loaded on to wagon.

Pellet prices have shot up owing to active participation in OMC's iron ore e-auction. State-owned miner Odisha Mining Corporation (OMC) conducted an e-auction for iron ore fines and lumps on 15 Jan. The lump ore auction received aggressive participation and bids increased by up to INR 3,600/t over the set base price. On a weighted average basis, bids climbed by around 30% over the reserve price.

Iron ore futures on the DCE for May'22 contract closed today at RMB 735/t ($115.8/t), up RMB 20/t d-o-d. On the spot market, liquidity ahead of the Chinese Lunar New Yearholidays.

Port inventories in China increase w-o-w - Pellet inventory at China's major ports was recorded at 4.2 mn t this week, as against 4 mn t a week ago.