SteelMint: Indian pellet export index rises by $33/t w-o-w as iron ore price hits record high

Indian pellet export prices have continued northward trajectory this week. SteelMint's Indian pellet export index (Fe 64% 3% Al, FoB east coast) has recorded a sharp hike of $33/t w-o-w and stands at to $243/t on the improved demand from China post labour holidays. Chinese spot iron ore fines price hit a new high to $228.9/t CFR China yesterday against $192.7/t CFR China last week.

Indian pellet makers highlighted, the market seems to be very strong for export on active Chinese buying interest. Domestic offers have risen sharply on the back of higher export realizations.

"Freight rates and charges are also getting higher due to increasing COVID concerns and port restrictions in China for Indian cargoes. Few Chinese ports were heard to be charging an additional port fee of RMB 5/t for epidemic prevention" highlighted a source while talking to SteelMint.

On the other side, few traders indicated that Chinese buyers are preferring cargoes on high seas than booking cargoes for June/July deliveries. Few Indian pellet makers are targeting over $275/t CFR China levels for low Al cargoes but some buyers have turned skeptical about paying extra to get a premium material, considering hike in prices, shared a trader.

Recent trades -

• In a confirmed trade recorded by SteelMint a Central India based pellet maker has concluded a pellet export deal (Fe 63.5%, Al 3.5%) for 55,000t recently this week at around $275/t CFR China for Jun'21 shipment. However, this trade has not been considered for price calculation; it was not falling under SteelMint price methodology.
  
  
• Southern India-based pellet maker - KIOCL had issued a pellet export sale tender for Fe 63.5% and Al 2-2.1%. The tender-fetched active response and bids fetched were significantly higher than the previous tender. The tender was concluded at around $234/t FoB for a quantity of around 100,000t earlier this week.
  
  

Rationale:

• Two pellet export deals were concluded in this publishing window but were not considered for price calculation as T1 inputs and given the weightage of 0% in this index.
  
  
• Apart from trades, SteelMint has also received seven (07) indicative prices, offers and all were considered as T2 trades and given a weightage of 100% in this index.
  
  

Key market highlights-

Freight rates increasing consistently- Freight rates for 50,000-55,000t export vessels from east coast India (Paradip) to China increased by around $4-5/t to $ 25-26/t against last week.

Pellet inventories at Chinese ports fall further- Pellet inventory at major Chinese ports moved down to 3.9 mn t last week against 4.1 mn t the previous week as per data maintained by SteelHome.

Domestic pellet prices hit record high- Yesterday SteelMint's bi-weekly domestic pellet index "PELLEX " has moved up sharply by INR 1,300/t to INR 16,400/t DAP Raipur. However, pellet offers have moved up further in the market today around INR 17,000-17,500/t exw Raipur. Few deals also concluded around 10,000 t pellet (Fe 63%) at INR 17,000/t exw today, SteelMint learned from sources.