Ex-India pellet prices have hit a one-and-a-half-year high riding on surging high-volume trade and prices, even as some sellers are heard to be holding back deals anticipating a further rise driven by sustained aggressive buying from China.
Sources said that ex-India pellet prices have climbed to an 18-month peak at $137-140/mt CFR China, compared to $134-140/mt CFR a week ago, with at least one trade for high-grade pellet reported at $145/mt CFR.
An Odisha-based pellet producer has reported a trade for 60,000 mt for December shipment to China at $139/mt CFR and another deal for 30,000 mt of high-grade (silica-alumina content less than three percent) pellet at $145/mt CFR, sources said.
A pellet producing arm of an Odisha-based integrated steel mill confirmed a trade for 50,000 mt at $140/mt CFR, while a central India-based seller concluded a trade for 50,000 mt at $137/mt CFR, the sources said.
“Indian pellet export prices have been very good for the past two to three weeks. Following the gains of last week, net realizations on ex-plant basis for a seller are now about INR 1,000/mt ($12/mt) higher than local sales. The demand is expected to gain further momentum as some blast furnaces in China are being brought back into production,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“Despite the rising prices, trade volumes could have been even higher, but some sellers are holding back offers anticipating prices to gain further in the coming week. Also, some pellet plants deeper in the hinterland are facing a shortage of railway rakes to transport material from plant to port,” he said.
However, one pellet plant producer expressed caution on the sustainability of the current high prices based on apprehensions regarding whether finished steel prices would continue to consolidate higher to absorb the rise in input costs. Also, some blast furnaces in China could either lower output or close down during the winter months, when sintering restrictions usually come into play.