Ex-India pellet prices have continued their sustained rise on the back of high-volume trades, but there have been some signs of ‘buyer fatigue’ towards close of the week with a few bids withdrawn in reaction to the rapid increase in prices, SteelOrbis learned from trade and industry circles on Friday, November 24.
Ex-India pellet prices have risen to $142-144/mt CFR China, up from $137-140/mt CFR a week ago.
The sources citing industry reports said that an aggregate of 130,000 mt was sold by pellet producers in Odisha over the past week.
They said that one pellet producer reported a trade for 50,000 mt at $142/mt CFR, while the pellet plant of an Odisha-based steel mill reported a trade for 30,000 mt at $144/mt CFR.
However, towards the close of the week, trade activity has been down slightly and at least two bids are heard to have been withdrawn due to high prices, the sources said.
Despite this, most producers have maintained a very bullish outlook claiming that, as margins from finished steel have improved for mills in China, there will be a greater appetite for higher-grade raw material and high-volume trades will be sustained.
Significantly, however, local sales prices of pellets have also increased even though no demand uptick has been reported by pellet plants. The rise in local sales prices has reduced the gap between export and local realizations to around INR 800/mt ($10/mt) compared to INR 1,000/mt ($12/mt) a week ago.
At least two pellet producers said that this would prompt sellers to continue to further push up ex-India prices to secure even higher export realizations over local margins, provided buyers continue to sustain high-volume trades.
“Buyers, represented by mills in China, are now well-placed to shift to higher-grade raw materials like low-content silica-alumina pellets. Medium grade iron ore fines prices are also hardening at a faster pace and this will support higher ex-India pellet prices,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“The only concern over the sustaining of the current bullish trend is in view of the approaching winter months and whether mills in China will continue to buy big volumes of raw material” he said.