India: Pellet export index climbs $2/t w-o-w as trade regains momentum

• Active trades revive stagnant market
  
  
• Export realisations rise, domestic prices dull
  
  

BigMint's India pellet (Fe 63%, 3-3.5% Al) export index increased by $2/t w-o-w to $107/t FOB east coast on 13 May. The export market saw a slew of trades after the Chinese market resumed post Labour Day holidays, and enquiries remained healthy in the seaborne market.

Sentiment remained positive, backed by positive Chinese macroeconomic data, and expectations of healthy steel production levels in May. Pellet inventories at 34 major ports stood at around 6.95 million tonnes (mnt).

Prices and trade update

Sellers offered aggressively post market resumption after holidays. Trades for (Fe 63%, 3-3.5% Al) pellets remained absent. In contrast, activity was largely subdued on the domestic market.

A west-coast based pellet maker was heard concluding a deal of 55,000 t high-grade (Fe 65.5%, low Al) pellets at $122-124/t FOB. While two other deals from the west coast were heard finalised at $122-124/t CFR China from east coast- based pellet makers.

Rationale

• Zero confirmed deal from India's east coast was recorded in this publishing window for T1 trade, and, therefore, this category was allotted 0% weightage for today's price calculations. Click here for the detailed methodology.
  
  
• Thirteen (13) indicative prices were received, and nine (9) were considered for the calculation of the index and given a balance 100% weightage.
  
  

Market updates

With markets reopening after the Chinese Labour Day holidays, sentiment improved noticeably as buyers returned with healthy enquiries and trading discussions regained momentum. An international trader said, "Some optimism has crept back into the market, indicating a gradual revival in activity after months of muted participation."

Market participation has also picked up, with more cargoes expected to move as freight rates climbed close to $15/t, pushing up CFR realisations for exporters. The rise in freight, coupled with improving buying interest, has supported stronger exporter sentiment. Another trader said, "The market has remained firm post-holidays, and participation is improving steadily. We expect bids and deal closures to gain pace over the next few days as buyers return more actively."

On the domestic front, pellet prices remained under some pressure amid subdued downstream demand, with buyers continuing to prefer need-based procurement. However, the widening gap between domestic and export realisations has encouraged pellet makers to increasingly explore overseas opportunities and divert volumes toward export markets or captive consumption.

Notably, pellet exports had remained subdued over the past 2-3 weeks due to the holiday-led slowdown in China. With Chinese buyers gradually returning to the market, trading activity has started normalising and sentiment has turned more constructive. While elevated iron ore and pellet inventories in China continue to warrant caution, improving post-holiday demand and stronger seaborne market indications are expected to support better trade activity in the near term.

Domestic vs export market

Price gap between export and domestic realisations narrows - Export realisations (Fe 63%) were recorded at INR 8,054/t ($84/t) on 13 May, reflecting an improvement of INR 50/t ($0.5/t) w-o-w amid a wider spread between INR and USD. Domestic realisations (Fe 62.5%) fell by INR 50/t ($0.5/t) w-o-w to INR 8,000/t ($84/t) exw. As a result, exporters turned to better realisations in the export market.

Factors impacting pellet exports

Chinese iron ore fines prices increase w-o-w: The benchmark iron ore fines Fe 61% index rose by $2/t w-o-w to $111/dmt CFR China on 12 May. Prices were supported by positive sentiment and firm steel demand. Healthy steel production and reduced inventories supported mill margins and overall demand fundamentals. Portside prices also rebounded amid steady procurement by steelmakers. However, high inventories at some ports continued to limit sharper gains.

DCE iron ore futures prices remain firm w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for the September 2026 contract closed at RMB 817/t ($120/t) on 13 May, steady w-o-w.

Vessel freights edge up w-o-w: Iron ore freights rose slightly w-o-w by $0.7/dmt to $15/dmt on 13 May. From India to China, overall vessel availability remained tight, though fixtures were healthy.

Outlook