Ex-India pellet prices have continued to lose ground in the absence of buying interest and with sellers also remaining out of the unviable market and preferring to wait and watch for improvements, SteelOrbis learned from trade and industry circles on Friday March 22.
Ex-India pellet prices have fallen to the range of $110-112/mt CFR, compared to $115-120/mt CFR a week ago, and downside risks of prices touching a new low of $100/mt CFR have worsened the mood in the market and most sellers retreating.
According to sources, the raw material market was showing divergent trends with prices of iron ore recovering in China, while pellet prices were declining at a faster pace. As a result, the price differential between iron ore and pellets on CFR basis has narrowed significantly, but mills in China are still not in the mood to restock pellets as reports in India indicate that Chinese mills are attempting to curtail outputs and manage the supply side to improve prices and margins.
“India sellers have no option but to move to the sidelines. Even after consecutive weeks of declines, the bid-offer gap is still very wide and sellers are not interested in concluding deals. We are hearing bids in the range of $95-100/mt CFR for pellets at a time when imported iron ore landed prices in China are ranging at $100-110/mt CFR. This does not work out for local sellers as it denotes that the premium on pellets over iron ore has been negated in the current price regime,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“We do not see an immediate rebound either as there are reports of pellet stocks at ports in China at around 8 million mt, which is on the higher side. At the same time, producers are able to secure around INR 1200/mt ($14/) higher realizations in domestic sales on ex-plant basis compared to export sales. Exports therefore continue to remain an unviable and unremunerative business,” he said.