SteelMint: India pellet export index stable as market awaits tenders' results

SteelMint's India pellet export index (Fe 64%, 3% Al, FOB east coast) has remained range-bound on a w-o-w basis at $126/tonne (t). Nearly 2-3 pellet export tenders, largely from eastern India-based players, were heard to have floated recently. However, the tender outcomes are still awaited. Trade sources expect that the market scenario would be clear in the next couple of days.

Rationale:

• No deal was heard to be concluded in this publishing window. Hence, the weightage given was 0%.
  
  
• Five (5) indicative offers and bids were received, and four (4) were considered for calculation of the index, given a weightage of 100%.
  
  

"The market is still silent. There are not many offers at present," a trader source said.

As per data maintained with SteelMint, pellet exports from Indian ports for the week (5 Dec-11 Dec) were recorded nil for the second consecutive week.

With the Winter Olympics coming up in Feb'22, output curbs in China will possibly be implemented on both blast furnaces and iron ore sintering machines, which will keep steel production on the lower side. This, in turn, has weighed down demand for the raw material.

Blast furnace capacity utilisation among China's 247 steel mills, fell to 74.8% around the end of November-early December as against 87.19% in early December of 2019, while around the same time of 2020, the rate was perching high at around 92.4%, according to Mysteel's data.

Spot iron ore prices have stabilised in the past one week after rising in the last couple of weeks. The spot price of benchmark iron ore Fe 62% fines dropped marginally to $108.25/t CFR China on 14 Dec'21, down by $0.3/t w-o-w. DCE iron ore futures Jan'22 contract closed at RMB 649/t ($111.96), (-RMB 1.5) d-o-d.

Total pellet inventory at China's major ports was recorded at 4 million tonnes (mn t) last week, as against 4.3 mn t the week before.

Domestic pellet prices increase: SteelMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, stands at INR 10,450/t DAP Raipur on 14 Dec'21, up by around INR 500/t against the last assessment on 10 Dec'21.

Though global iron ore prices have increased along with rise in futures, physical trading is yet to pick up which, in turn, is weighing on Indian pellet sentiments, said an eastern India-based pellet player.