SteelMint: India's pellet export index edges down on lower bids from China

India's pellet (Fe 63%, 3% Al) export index (FoB east coast) decrease $4/t w-o-w to $161/t from $165/t on 6 April 2022.

Today, the market turned soft with the drop in global iron ore prices. Local mills in China have reached their break-even point following the increase in iron ore/coke prices, and Covid has had a moderate impact on social consumption. On the other hand, filling up of credit lines in the EU and decent bookings from India last week have kept demand slow this week from EU buyers.

Rationale

• One eastern India-based deal was reported this week for Fe 62.5%, 3% Al, which was heard concluded on index basis which would translate to $188-190/t CFR China. The deal was not taken into the price calculation as it was not confirmed either by the buyer or seller under T1 trade and hence given no weightage in index calculation. Click here for methodology.
  
  
• Ten (10) indicative offers, and bids were received, and six (06) were considered for calculation of the index, given 50% weightage.
  
  

An eastern India-based pellet maker had floated a tender yesterday but due to drop in bids, the tender didn't close. The global demand is the other factor and Chinese exporters are concerned that the supply chain will be diverted to other countries as a result of the current constraint measure.

Market highlights-

• Domestic realisations higher than exports: As per SteelMint analysis, domestic pellet (Fe 63%, 3% Al) is assessed at INR 11,700/t ($154/t) loaded on to wagon for Barbil, eastern India. On the other hand, SteelMint's pellet export price on ex-plant basis for the Barbil region remains at around INR 10,800/t ($142/t) exw. However, fall in sponge prices and lower bids have kept domestic trade on the lower side.
  
  
• Global iron ore prices fall w-o-w: The benchmark Fe 62% fines index decreased by $5.95/t w-o-w on 5 April to $154.85/t CFR China. However, on a d-o-d basis prices rose as Chinese macroeconomic data provided a slight boost to the outlook even as the country's Covid-19 situation continued to impede demand growth for finished steel.
  
  
• DCE iron ore futures down w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for September contract closed today (at 3 PM) at RMB 884/t, down RMB 42.5/t ($7/t) as against RMB 926.5/t on 6 April, 2022. On a daily basis, prices decreased by around RMB 41/t ($6/t).
  
  
• Port inventories in China inch up w-o-w: Pellet inventory at China's major ports inched up to 5.05 mnt this week against 5 mnt a week ago.