SteelMint: India's pellet export index falls $8/t; over 150,000 t deals reported

SteelMint's India pellet (Fe 63%, 3% Al) export index FOB east coast was recorded at $118/t, down $8/t w-o-w on declining bids from buyers. According to market sources, the drop in iron ore prices and sluggish steel demand led to the fall in bids.

The pellet export market is witnessing a downtrend and sellers are likely to remain uninterested in shifting to seaborne cargoes unless the export market improves, sources added. Pellet demand is expected to pick up in the coming weeks if margins are favourable.

India's pellet export shipments were recorded at 241,200 t in the first week of February in comparison with 163,925 t in the previous week, according to vessel line-up data maintained with SteelMint.

Rationale

• One deal was heard this week which was concluded for 55,000-75,000 t of pellets (Fe 62%) from eastern India at around $130/t CFR China. But it was not taken for price calculation under T1 trade due to confirmation pending from officials and given 0% weightage in index calculation. Click here for methodology.
  
  
• Ten (10) indicative offers and bids were received, and nine (9) were considered for calculation of the index, given 100% weightage.
  
  

Another pellet exporter tender concluded two tenders for around 50,000 t each of pellets (Fe 64/63%, 8% SiO2+Al2O3) at around $124-125/t FOB today.

Market highlights

• Export realisations fall: As per SteelMint's analysis, domestic pellet (Fe 63%, 3% Al) offers stood at INR 9,600/t ($116/t) loaded on to wagon for Barbil, eastern India. On the other hand, SteelMint's pellet export prices ex-plant for the Barbil region are down to around INR 7,900/t ($95-96/t).
  
  
• Global iron ore prices fall on poor steel demand: The benchmark Fe 62% fines index decreased by $7.15/t w-o-w on 7 February to $121.7/t CFR China as against $128.95/t a week ago. Iron ore spot prices in China dropped w-o-w as the rebound in steel sales fell short of expectations.
  
  
• DCE iron ore futures edge down: Iron ore futures on the Dalian Commodity Exchange (DCE) for May 2023 contract closed on 8 February (at 3 pm) at RMB 848/t, down RMB 19/t ($3/t) as against RMB 867/t on 1 February. Prices rose by around RMB 8/t ($1/t) d-o-d.
  
  
• Port inventories in China rise: Pellet inventory in China's major ports stood at 6.2 mnt this week against 5.8 mnt a week ago.