SteelMint: Indian pellet export index rises by $2/t in a recent deal

Indian pellet export prices have recorded a further increase after hitting a record high last week. SteelMint's weekly pellet export index (FOB east coast India) for Fe 64% grade has increased by $2/t w-o-w to $210/t on the anticipation of improved demand after Chinese come-back from holidays. Trade sources highlighted, the market seems to be strong for pellet export. Not many players were active in last few days owing Labour day holidays and market participants expect a clearer picture towards the end of this week. High grade pellets continue to fetch a better premium over standard grade pellets.

Recent trades -

• In a confirmed trade recorded by SteelMint a West Bengal based pellet maker has concluded a pellet export deal (Fe 63%, Al 4%) for 55,000t yesterday at around $226-227/t CFR China for Jun'21 shipment.
  
  
• In another trade heard, a pellet maker concluded a deal for Fe 63.5% grade, low Al pellets for around 50,000 t at $245/t CFR China towards the end of last week. The deal was not considered for price calculation due to higher grade.
  
  

Chinese steel players were on holiday between May 1-5 th and are expected to resume on 6th May tomorrow. Despite holidays spot iron ore prices got strengthened yesterday however activities were limited. Steel mills in China expecting some more stringent pollution cuts may led the iron ore demand slow and encourage the -pellet tarde.

Rationale:

• One pellet export deal was concluded in this publishing window and considered for price calculation as T1 inputs and given the weightage of 50% in this index.
  
  
• Apart from trades, SteelMint has also received seven (07) indicative prices, offers and bids (T2). Six (06) were considered as T2 trades and given a weightage of another 50% in this index.
  
  

Key market highlights-

Spot iron ore prices rise - Chinese spot prices for Fe 62% fines have picked up to $189.65/t, CFR China assessed yesterday against $186.45/t CFR China a day before. However, on a weekly basis prices were down around $1/t against the last week at $190.45/t CFR China. The prices were hovering at over 10-year high last week before holiday.

Freight rates rise- Freight rates for 50,000-55,000t export vessels from east coast India (Paradip) to China increased by around $3-4/t to $ 20-22/t against last week.

Pellet inventories at Chinese ports fall- Pellet inventory at major Chinese ports moved down to 4.1 mn t last week against 5.2 mn t the previous week as per data maintained by SteelHome.

Domestic pellet prices rise on limited offers - SteelMint's bi-weekly domestic pellet index "PELLEX " moved up by INR 450/t to INR 15,000/t DAP Raipur in recent deals. Sponge iron manufacturers expect pellet prices to remain supported in the near term on tight supplies and recently concluded export deals.