The weakness in the Indian pellet market has gained momentum with prices continuing to decline sharply and with not a single bid being reported over the course of the past week and the near-term outlook turning bleak, SteelOrbis learned from trade and industry circles on Friday, January 19.
Ex-India pellet prices have declined by $5-7/mt to $130-135/mt CFR China, but these were considered to be largely indicative as no sellers have reported receiving any bids with buyers having almost completely exited the market.
“It seems that mills in China have completed restocked ahead of the Lunar New Year holiday. We have been struggling to submit offers, but there has been no response at all even after adjusting the offer price,” an Odisha-based pellet producer said.
However, another pellet producer, also Odisha-based, maintained a more fundamental reason for the sudden halt in trading. He said, “We do not seek any improvement in the coming weeks. We hear, although not confirmed, that blast furnaces in China are closing down. Also, margins in finished steel sales have not improved as much as expected. In fact, some mills are reporting declining margins. Hence, raw material demand is entering a bearish zone.”
“A few sellers are believed to have received bids for February and March, but these are as low as $110-120/mt CFR, which is unviable for sellers. Difficult months are ahead for Indian pellet export-based producers,” he said.
According to industry estimates here, pellet port stocks in China have increased by around 0.84 million mt over the past week and are sufficient to meet demand during the holidays ahead.