India: BigMint's pellet export index stable, trade remains muted

• Chinese market resumes after holidays
  
  
• No pellet export deals from India
  
  

BigMint's India pellet (Fe 63%, 3% Al) export index (FOB east coast) remained stable w-o-w at $106/tonne (t) on 8 May, 2024. The export market remained sluggish in the last one week following weak buying interest as Chinese participants were away for the week-long Labour Day holiday. However, markets resumed this week but no successful transaction was concluded from India amid lack of firm bids.

A South India-based pellet producer floated an export tender for exports of 50,000 t of iron ore pellets (Fe 63%, 8% Al2O3+SiO2). The bid responses are expected to be declare on 9 May and are only for the company's empanelled customers. Another eastern India-based pellet maker had floated an export tender earlier this week. However, the tender remained inconclusive, as per sources.

Indian pellet prices in the seaborne market remained largely stable in the last one week. The pellet export market had not shown uptrend after the holidays as no positive bids were received for Indian premium material in the sea-borne market.

A pellet producer from eastern India said: "Some participants expected that the market will bounce back post-holidays. However, there are no positive sign from the sea-borne market this week so far. Meanwhile, some pellet producers are optimistic about market improvement and are holding their offer for the near term."

Domestic realisations were higher by INR 1,000/t ($14/t) compared to exports. In the local markets, pellet (Fe 63%) prices remained stable w-o-w at INR 8,250/t exw ($99/t) in Barbil, eastern India. However, pellet export ex-plant price realisation for Barbil was also at the same level w-o-w at INR 7,200-7,300/t exw ($87/t) this week.

A trader said: "The Chinese market participants returned this week after the week-long holidays. However, buying interest remained sluggish as steel mills are getting decent margin in the utilisation of April cargo. Some buyers also resisted the uptrend in the first day after the holidays. The deals from India are yet to be concluded due to slow market activity for the premium material while some seaborne buyers fetched lower grade fines cargo from India yesterday."

Domestic pellet demand is anticipated to remain largely moderate in the near term due to the sharp rise in steel prices this week. Few Indian pellet producers have diverted two pellet cargos recently in western India amid active demand and decent prices against export offers.

Chinese sources said that portside offers of Indian pellets (Fe 63.5%) decreased by around RMB 20/t ($3/t) w-o-w on 8 May post-holidays. Offers were recorded at around RMB 990/t at ($137/t) Qingdao, inclusive of all import taxes and port charges. On d-o-d basis, portside offers remained largely stable.

The Chinese domestic market witnessed some downtrend after holidays amid poor import margin.

Rationale:

• No confirmed pellet export deal was recorded and not considered for price calculation. It was given 0% weightage in the index calculation Click here for methodology.
  
  
• Nine (9) indicative prices were received, and seven (7) were considered for calculation of the index and given a 100% weightage.
  
  

Market dynamics

• Iron ore spot prices up w-o-w: The benchmark iron ore fines index remained largely stable w-o-w at $119/t CFR China on 30 April due to last week's Labour Day holidays. Buyers couldn't accept the sudden spike in prices with no significant purchasing activity. As per reports, mills using April cargoes are still seeing better margins than May cargoes, considering the ongoing increase in raw material prices over the past few weeks.
  
  
• DCE futures edge down w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for the September 2024 contract decreased by RMB 8/t ($1/t) w-o-w to RMB 866 ($120/t) on 8 May. Prices dropped by RMB 20.5 ($3/t) d-o-d today.
  
  
• Pellet inventories edge up: Pellet inventories at China's major ports inched up by 0.35 mnt to 7.5 mnt on 29 April compared to the last week, according to SteelHome data.
  
  

Pellet exports from India nil

Notably, no pellet cargo has been concluded from India in the last three weeks, as per vessel line-up data maintained by BigMint.

Outlook:

Pellet export offers in seaborne market may remain volatile in the near term as mills are not interested in purchasing material at the cost of lesser import margins.