SteelMint: Indian pellet export index increases by $2/t

SteelMint's pellet export index (FoB east coast India) has increased by $2/t w-o-w to $126/t on 21st Oct'20. Few market participants expect Chinese stricter pollution control norms to boost pellet demand, however some traders highlighted limited buying interest at current indicative prices.

One pellet export deal was heard to have concluded from eastern India at around $135-136/t CFR, China (equivalent to $124-125/t FOB India) recently. However, this deal could not be confirmed yet either from the buyer or seller side. Therefore, it was not considered under T1 calculation and given a weightage of 0%.

Rationale: In absence of confirmed trades (T1), the entire weightage for index calculation has been transferred to T2 inputs.

However, SteelMint has received around six indicative prices (T2) and they were taken into consideration with an average price of $126/t FOB India.

Spot iron ore fines price remains range-bound - Chinese spot iron ore fines (Fe 62%) remained majorly stable on weekly basis and stood at $120.4/t CFR China today. However, on daily basis the prices have increased marginally today against $119.5/t CFR China assessed yesterday.

Pellet inventory at major Chinese ports has increased slightly by around 0.1 mn t to 11.01 mn t as on last week as per Steelhome data.

Chinese steel mills are still very uncertain and reluctant to buy pellets around the winter cuts. However, production cuts may support pellet demand.

Major pellet makers from Barbil resumed offers in the domestic market this week. Indicative pellet price from Barbil (Odisha) stands at INR 7,800-8,000/t (Loaded to wagon) this week. Considering current offers, the domestic ex-plant realization is still more profitable than the export realization.