SteelMint: India's pellet export index surges on reopening of Chinese market

SteelMint's India pellet (Fe 63%, 3% Al) export index FOB east coast was recorded at $126/t, up by $8/t w-o-w. Prices increased following the return of Chinese market participants
from the Lunar New Year holidays.

Trading was observed to be active in China. After the Lunar New Year holidays, most steel mills began purchasing cargoes. Some market participants were optimistic, but they were waiting for better price clarity.

India's pellet export shipments were recorded at 163,925 t in the fourth week of January in comparison with 355,870 t in the previous week, according to vessel line-up data maintained with SteelMint.

Rationale

• One deal was heard this week, but it was not taken for price calculation under T1 trade and given 0% weightage in index calculation. Click here for methodology.
  
  
  
• Ten (10) indicative offers and bids were received, and eight (8) were considered for calculation of the index, given 100% weightage.
  
  
  

As per the market sources, one of the eastern India-based pellets maker concluded around 75,000 t of pellets deal at around $137-139/t CFR China recently this week. However, the deal was not confirmed till the time of publishing this article. Therefore it is not considered for index price calculation.

Market highlights

• Export realisations still lower than domestic: As per SteelMint's analysis, domestic pellets (Fe 63%, 3% Al) offers stood at INR 9,600/t ($117/t) loaded on to wagon for Barbil, eastern India. On the other hand, SteelMint's pellets export prices ex-plant for the Barbil region has also been increased at around INR 8,500-8,600/t ($104-105/t).
  
  
• Global iron ore prices up w-o-w as China returns from holidays: The benchmark Fe 62% fines index increased by $2.15/t w-o-w on 31 January to $128.95/t CFR China as against $126.8/t a week ago. Iron ore spot prices in China rose d-o-d as market participants returned from the Lunar New Year holiday. Mill output will increase from February onwards, which might keep iron ore prices strong in the short run.
  
  
• DCE iron ore futures edge up: Iron ore futures on the Dalian Commodity Exchange (DCE) for May 2023 contract closed on 1 February, 2023 (at 3 pm) at RMB 867/t, up by RMB 2/t ($0.3/t) as against RMB 865/t on 20 January, 2023. Prices inched up by around RMB 1/t ($0.15/t).
  
  
• Port inventories in China up w-o-w: Pellets inventory in China's major ports stood at 5.8 mnt this week against 5.6 mnt a week ago.