SteelMint: India's pellet export index slides further by $4/t, w-o-w

SteelMint's pellet export index (Fe 64%, 3% Al, FoB east coast) declined $4/t, w-o-w, and currently stands at $132/t. The index has fallen to a 10-month low, as per SteelMint data. These levels were last witnessed towards early-Nov'20. Pellet prices and buying interest continued to remain on the lower side due to falling Chinese demand.

Steel production cuts in Jiangsu are heard to have been ramped up. This was coupled with reports of further production cut plans for the upcoming winter season as part of which reduction in output will mainly be through the blast furnace route.

As the Indian pellet exports market continues to remain dull since the past few months, some pellet makers were heard exploring non-Chinese markets. South India-based pellet maker KIOCL has concluded an export deal for 55,000 t of pellets (Fe 63% and 2% Al) via a tender. The deal was heard concluded at $160/t FoB for a non-Chinese destination towards the end of last week.

A couple of more players were heard floating export tenders; however, the tender outcomes are awaited.

A few trader sources highlighted that a pellet export deal for 20,000 t was heard concluded recently to Malaysia from an eastern India-based player.

"The current domestic realisation for pellet is more than exports. Hence, we are not exporting at current levels. The minimum breakthrough for pellet exports for standard grade (Fe 63%, 3.5% Al) is at $185/t CFR China. On the other hand, bids are relatively low", shared an eastern India-based pellet maker.

"Indian pellet export price indications are heard at around $155-160/t CFR China for standard grade. China won't be an active market for Indian pellet cargoes for a couple of months", a trader said.

India's pellet export shipments were recorded at 0.54 million tonnes (mn t) in Aug'21 hitting an eight-month low, as per data maintained with SteelMint. The shipments fell by 54%, m-o-m, compared to 1.2 mn t in Jul. China continued to remain the largest importer of Indian pellets in Aug at 0.24 mn t, down 73% as against 0.9 mn t in Jul. South Korea was the second-largest importer at 0.14 mn t followed by Oman and Indonesia at 0.05 mn t each.

Rationale:

• No deals were heard to have been concluded for China in the current publishing window. Hence, the weightage given was 0%.
  
  
• Seven (07) indicative offers and bids were received, and five were considered for calculation of the index and given a weightage of 100%.
  
  

Market highlights

• Spot iron ore prices down by around $11/t w-o-w: The spot price of iron ore benchmark Fe 62% fines fell by $10.5/t today i.e 8th Sept'21 to $133.05/t CFR China as against $143.55/t assessed a week ago. Also the prices fell by around $5/t d-o-d as against $137.85/t, CNF China assessed yesterday.DCE iron ore futures' Jan'22 contract closed at RMB 763/t ($118) (-RMB 16)
  
  
• Pellet inventory in China higher, w-o-w: Total pellet inventory at China's major ports was recorded at 4.4 mn t last week as against 4 mn t a week ago.
  
  
• Domestic pellet prices fall further: SteelMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, moved down by INR 500/t to INR 11,300/t DAP Raipur on 7 Sept'21. Indian pellet prices have been falling incessantly for the last few weeks and this week too prices plummeted sharply by around INR 250-1,000/t across regions on weak demand and low buying interest.