India: Pellet export index plunges by $4/t w-o-w amid slow buying

• Pellet export activity slows after holiday rebound
  
  
• Chinese inventories rise, dampening fresh buying interest
  
  

BigMint's India pellet (Fe 63%, 3-3.5% Al) export index declined by $4/t w-o-w to $103/t FOB east coast on 20 May. The export market saw a pause in trades after active last weak; with market busy in dispatching old booked orders but no fresh enquiries amid inventories stockpile.

Sentiment turned cautious, drawn by weakening Chinese macroeconomic data, and failed Beijing talks. Pellet inventories at 34 major ports stood at around 7.1 million tonnes (mnt) against 6.95 mnt last week.

Prices and trade update

No confirmed deals for India-origin pellets (Fe 63%, 3-3.5% Al) were heard during the current assessment window as seaborne buying activity remained subdued.

A tender for Fe 66% high-grade pellets was heard floated today, although deal confirmation was still awaited at the time of publication. Only selective high-grade deals are expected in the near term.

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.
  
  
• Eleven (11) indicative prices were received, and ten (10) were considered for the calculation of the index and given a balance 100% weightage.
  
  

Market updates

The pellet export market turned subdued again during the current assessment window, with no confirmed deals for India-origin pellets (Fe 63%, 3-3.5% Al) heard amid cautious buying sentiment and elevated inventories in China.

Market participants noted that the brief recovery seen after the Chinese market resumed post Labour Day holidays last week has largely faded. Buyers, who initially returned with healthy enquiries and limited restocking interest, have now slowed procurement activity due to sufficient inventories and weak downstream sentiment in the seaborne market.

According to market sources, pellet inventories in China were heard at around 7.1 million tonnes (mnt), which continued to discourage aggressive bookings and capped fresh buying interest.

An international trader commented, "Since pellet inventories are already high in China, buyers are currently showing preference only for premium-grade Fe 66% pellet feed and high-grade pellets. Interest in mid-grade Fe 63% materials remains very limited at the moment."

A seller added, "Dispatches for previously booked cargoes are still ongoing, so there is no urgency for fresh buying right now. Only selective deals for high-grade materials may happen in the near term, while aggressive preference for mid-grade pellets is not expected in the coming week."

Domestic vs export market

Price gap between export and domestic realisations widened slightly - Export realizations (Fe 63%) were recorded at INR 7,800/t ($80.5/t) on 20 May, reflecting a fall of INR 150/t ($1.5/t) w-o-w amid a wider spread between INR and USD. Domestic realizations (Fe 62.5%) too fall by INR 100/t ($1/t) w-o-w to INR 7,900/t ($81.5/t) exw.

Factors impacting pellet exports

Chinese iron ore fines prices decline w-o-w: The benchmark iron ore fines Fe 61% index fell by $3/t w-o-w to $108/dmt CFR China on 19 May. Prices declined with subdued trades observed for medium-grade fines, as weaker buying appetite in the seaborne market weighed on sentiment. The broader ferrous complex remained under pressure following disappointing Chinese economic data and expectations of seasonally lower steel consumption. Steel mills largely continued need-based procurement, limiting fresh buying interest.

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 800/t ($118/t) on 20 May, down RMB 17/t ($2.5/t) w-o-w.

Vessel freights surge w-o-w: Iron ore freights rose slightly w-o-w by $1/dmt to $16/dmt on 19 May. From India to China, overall vessel availability remained tight, though fixtures were healthy.

Outlook