Ex-India pellet prices declined amid inactive trading conditions with buyers from China largely absent from the markets and reports of mills shifting feedstock preference to lower priced fines to reduce cost of production when margins from finished steel remained under pressure, SteelOrbis learned from trade and industry circles on Friday, March 8.
Ex-India pellet prices lost around $3/mt to the range of $122-127/mt CFR China but bids received were heard at $110-115/mt CFR and the wide bid-offer disparity prevented any deals.
The bearish mood among buyers was reflected in failure by a southern India based pellet producer to successfully close an export tender for 50,000 mt last week, as bids received were considered too low and the tender was subsequently cancelled.
Similarly, an Odisha based pellet producer pulled an offer for 40,000 mt after bids received were not acceptable.
“Export trade has almost come to a halt over the past several weeks. In fact, no significant deals have been heard since business resumed after Lunar holidays in China. Many pellet producers are reporting cuts in plant output by 10-15 percent or planning maintenance shutdown, as there are large inventories available to cater to domestic demand,” a member of Pellet Manufacturers’ Association of India (PMAI) said.
“There is no restocking from China even as we hear that port stocks are down. Mills are shifting to lower priced fines to reduce cost of production. Hence we are seeing a fundamental decline in demand of pellets and trend expected to sustain for now,” he said.
Another official with an Odisha based pellet plant said that domestic pellet price was down by around INR 200/mt ($2/mt) but even after the decline, domestic realization was INR 750/mt ($9/mt) higher compared to realizations from exports and hence selling overseas in current conditions was actually discouraged.