SteelMint: Indian pellet export index increases by $2/t post-Chinese holidays

SteelMint's pellet export index (FoB east coast India) has increased by $2/t w-o-w to $124/t on 14th Oct'20. However, market participants highlighted there are few sellers and very limited offers are floating in the market.

Rationale: One pellet export deal was heard to have concluded from eastern India at around $137/t CFR, China (equivalent to $126/t FOB India) early this week. This was considered under T1 calculation and given a weightage of 50%.

SteelMint has received around four indicative prices (T2) and they were taken into consideration with an average price of $123/t FOB India.

Spot iron ore fines price slides this week - Chinese spot iron ore fines (Fe 62%) increased after the holidays and stood at $125.85/t CFR China towards the closing of last week. However today the prices have come down today to $119.75/t CFR China today owing soften in iron ore demand ahead of the winter season, weaker demand outlook, and a decline in futures.

Pellet inventory at major Chinese ports has increased slightly around 0.05 mn t to 10.95 mn t last week against 10.9 mn t a week before as per Steelhome data.

Chinese steel mills are still very uncertain about the winter cuts. However, production cuts may support pellet demand.

One of the major pellet makers from Barbil has taken a maintenance shutdown for the next one week. Indicative pelet price from Barbil (Odisha) stands at INR 7,500-7,800/t (Loaded to wagon) this week. Considering current offers, the domestic ex-plant realization is profitable than the export realization.