SteelMint: India pellet export index rises tracking fines rally

SteelMint's India pellet (Fe 63%, 3% Al) export index FOB east coast was recorded at $123/t, up $5/t w-o-w despite sluggish pellet demand in the export market. As per market sources, one deal for 55,000 t of pellets (Fe 63%) is under negotiations and may get concluded at around $136-137/t CFR China. Another tender for pellets exports by an eastern India-based player was also heard to be under discussion.

In order to manage margins, Chinese steel mills are mostly concentrating on discounted material like low-grade ore, sinter over high-grade material feed to its blast furnace. It is expected to continue the same trend for the next few days till margin improves. Some Indian players were heard targeting price levels of $139-140/t, CFR China mark but deals are yet to be concluded at an increased price levels.

India's iron ore pellet export shipments were recorded at 241,150 t in the second week of March in comparison with 106,000 t in the first week, as per the vessel line-up data maintained with SteelMint.

Rationale

• No deal was recorded in this week so far for price calculation under T1 trade and given 0% weightage in index calculation. Click here for methodology.
  
  
• Nine (9) indicative offers and bids were received, and seven (7) were considered for calculation of the index, given 100% weightage.
  
  

Market highlights:

• Realisations of domestic pellets still better: Domestic pellets (Fe 63%, 3% Al) assessement stood at INR 9,500-9,700/t loaded on to wagon for Barbil, eastern India. On the other hand, SteelMint's pellets export prices ex-plant for the Barbil region increased along with global price hike this week to around INR 8,300-8,400/t.
  
  
• Global iron ore prices increase: The benchmark Fe 62% fines index increased by $7.65/t w-o-w on 14 March to $133/t CFR China as against $125.35/t on 6 March, a week ago. According to some sources, medium-grade fines have begun to emerge as a more cost-effective alternative. Furthermore, the sentiment has improved as steel margins have recovered.
  
  
• DCE iron ore futures rise w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for May 2023 contract closed on 15 March (at 3 pm) at RMB 926.5/t, increased by RMB 14.5/t ($2/t) against RMB 912/t on 8 March. Prices moved up by RMB 6.5/t ($1/t) d-o-d.
  
  
• Port inventories in China stable: Pellet inventory in China's major ports stood at 6.6 mnt this week remained stable against a week ago.