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INDIA: STEELMINT’S PELLET EXPORT INDEX FALLS BY $7/T FOLLOWING SHARP DECLINE IN
FUTURE PRICES

 * Bid offers disparity rises to $10/t
 * No inquiries this week for Indian pellets in sea market

SteelMint’s India pellet (Fe 63%, 3% Al) export (FOB east coast) index decreased
by $7/t w-o-w to $125/t on 10 January 2024. No deal for the Fe 63% pellet was
reported from the East Coast in this publishing window amid bid-offer disparity.

Recent deals and offers:

 * A South India-based pellet maker had floated an export tender for 50,000 t of
   material (Fe 63%; Al2O3- less than 2%) on 4 January. As per sources, the
   tender was heard concluded at around $140/t FOB.
 * Also, SteelMint recorded a deal from Eastern India for 75,000 t (Fe 62%
   grade) at $150/t CFR China (INR 13,300/t) the the middle of last week.
 * KIOCL has again suspended operations at its 3.5 mnt/year pellet plant in
   Mangalore w.e.f 9 January, 2024 as per the company notification released
   recently. The suspension was undertaken amid the non-availability of iron ore
   fines.
 * Another pellet plant from east India has taken a maintenance shutdown
   following the negative feelings in the overseas market. The plant may restart
   the operation activity from the next week.

The pellet export market saw mixed trends in this publishing window. However,
the market fell drastically in the last two or three days after fewer interested
Chinese buyers for Indian premium materials.

The buyer’s bid remained $10-15/t lowered against the seller’s offers. The
seaborne market facing a liquidity problem also after the drop in domestic and
export steel prices in China.

An eastern India-based pellet seller said, “We didn’t receive inquiries this
week from buyers. Most of them want to book material at very low prices which is
not viable for us to sell knowing the higher iron ore fines prices in the
domestic market which led to a rise in pellet production cost.”

Another pellet producer said: “pellet export prices fell after a sharp decline
in iron ore future prices this week. Chinese mills already booked enough
material from India last month for Lunar Holiday restocking. No one is taking
the position in the seaborne market. Pellet offers may fall more in the coming
days following the drastic drop in futures.”

On the other hand, a few Chinese steel sources reported that portside offers in
China for Indian pellets (Fe63.5%) had decreased by around RMB 40-50/t ($6-7/t).
Today’s offers were recorded at around RMB 1,175-1,180/t at ($165-166/t) Qingdao
port inclusive of all import taxes and port charges.

Steel prices in China continued to fall after the Gregorian New Year following
the lack of optimistic sentiments among market participants. As per sources,
major mills had completed the procurement before the Lunar holidays and now
Chinese buyers remained cautious about booking premium material due to margin
issues.

Looking at the “winter storage” policy, recently Wuhan Iron and Steel, Shanxi
Hongda, Shanxi Jianlong, Xilin Iron and Steel, Shanxi Huaxinyuan, Longgang,
Lianyungang Yaxin and other steel mills have successively issued “winter
storage” policies, basically adopting deferred settlement mode and price lock
mode are the main ones, and some steel mills have certain delivery incentive
policies.

Rationale:

 * No deal of pellet export was recorded and not taken into consideration. It
   was given 0% weightage in index calculation Click here for methodology.
 * Eleven (11) indicative prices were received, and nine (9) were considered for
   calculation of the index, and given a 100% weightage.

India’s weekly pellet exports fall

India’s pellet export shipments stood at 259,900 t in the first week of January,
compared to 655,750 t in the last week of December, as per vessel line-up data
maintained with SteelMint.



Market highlights:

 * Domestic realisations higher against export : Domestic pellet (Fe 63%) prices
   decreased by INR 100/t ($1/t) w-o-w to INR 8,950/t ($108/t) exw in Barbil,
   eastern India. On the other hand, SteelMint’s pellet export ex-plant price
   realisation for the Barbil fell by INR 500/t ($6/t) to around INR
   8,700-8,800/t ($104-105/t) exw this week. However, export realisation is
   lowered by INR 200/t ($2.5/t) against the domestic market.
 * Global iron ore prices fall w-o-w: The benchmark Fe62% fines index decreased
   by $4/t w-o-w to $139/t CFR China on 9 January 2024. The prices of iron ore
   fines in China decreased due to weak buying interest following lowered steel
   output amid negative profit margins. The volume of molten iron production has
   declined owing to steel production cut by major Chinese mills. Buying demand
   for iron ore was impacted by the sluggish steel demand during the winter
   season.
 * DCE iron ore futures decline w-o-w: Iron ore futures on the Dalian Commodity
   Exchange (DCE) for May 2024 contract declined by RMB 55.5/t ($8/t) to RMB
   962/t ($135/t) on 10 January compared to 1017.5/t ($143/t) a week before. On
   a d-o-d basis, prices sharply fell by RMB 32 ($5/t) as against RMB 962/t
   ($140/t).
 * Port inventories in China up: Pellet inventories at China’s major ports
   increased by 0.3 mnt to 4.6 mnt on 6 January compared to 28 December.



Outlook:

As per the SteelMint analysis pellet offers in the overseas markets may remain
volatile seeing the current market scenario, as most mills have already procured
material before holidays and not expected much bookings in the coming days.

--------------------------------------------------------------------------------

Posted

January 10, 2024

in

Pellets

by

Ratiram Gurjar

Tags:

India pellet export index, Pellet export index


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