SteelMint: India's pellet exports to EU surge as geopolitical crisis intensifies

The Indian pellet export market has seen a significant shift in recent times after global trade tensions erupted following the Russia-Ukraine war.

Indian producers have been witnessing a sudden rise in enquiries for prompt pellet cargoes, as SteelMint reported. According to market sources, deals of over 350,000 t of pellets were concluded in the past week from Indian suppliers, with EU being the destination.

Recent Pellet export deals:

However, a few trader sources highlighted a rise in freight rates and vessel availability as issues impacting fresh deals. Notably, the vessel freight from India to Europe has increased to $45-50/t this week as against $30-35/t last week.

However, the market is currently silent in China with no firm bids or deals heard. However, price indications are at $165-170/t FOB levels. However, with better price realisations in Europe, Indian players are not actively chasing Chinese markets currently.

SteelMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) stands at $172/t, up by $16.5/t w-o-w.

Rationale

• No deal was reported so far this week, hence, not taken into price calculation under T1 trade and given no weightage in index calculation, Click here for methodology.
  
  
• Nine (09) indicative offers and bids were received, and four (04) were considered for calculation of the index, given 100% weightage.
  
  

Market highlights:

• Global iron ore prices increase w-o-w: The benchmark Fe 62% fines index increase by $17.8/t on 8 Mar'22 to $162.25/t CFR China. Seaborne iron ore prices surged on expectations of tightening supply due to the Russia-Ukraine conflict. Demand from Chinese steel mills continued to recover while the conflict had caused concerns that market fundamentals could tilt from tightly balanced toward a supply shortage.
  
  
• DCE iron ore futures increase w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for May contract closed today (at 3 PM) at RMB 812.5/t, down RMB 32/t ($5/t) d-o-d. However, on a weekly basis, it is moved up by around RMB 57.5/t ($9/t).
  
  
• Port inventories in China stable w-o-w: Pellet inventory at China's major ports stood stable at 4.5 mnt this week against a week ago.
  
  

Indian pellet demand for cargoes going into China was weak, with traders seeing minimal inquiries for their current seaborne cargoes. "There is currently a demand gap between China and Europe and the price difference is very wide. But Chinese buyers are not willing to pay such prices," an international trader source said.