Ex-India pellet prices have staged a smart recovery riding on the back of the emergence of large-volume deals, and the improved outlook on finished steel market fundamentals in China has triggered renewed raw material restocking.
Sources said that ex-India pellet prices have increased by $7/mt to $124-125/mt CFR China and, more significantly, a number of large-volume deals in the range of 55,000- 110,000 mt has been reported during the past week.
A southern India-based pellet producer which failed to close an export tender for 55,000 mt early this month has been successful in concluding a deal for 110,000 mt at $125/mt CFR, indicating the sharp reversal in the export market trend.
A deal for 55,000 mt was reported by an Odisha-based pellet producer at $124/mt CFR while a pellet producing arm of an Odisha-based integrated steel mill is heard to have concluded a trade for 60,000 mt at around $125/mt CFR.
“Sentiments have improved very much over the past week and the mood among exporters is very buoyant as both prices and trade volumes are looking very good,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“The upturn in exports has come at a very good time as the cost of production has also gone up. Most pellet plants have to accumulate iron ore fines as raw materials from mines ahead of the monsoon season next month, which usually means a tightening of supplies from pitheads and higher transportation costs. During the monsoon season, pellet plants closer to ports will have an advantage in selling overseas, while those inland and away from ports will focus on domestic sales,” he said.
According to industry insiders, following the rise in ex-India pellet price, the differential between domestic realisations and exports has narrowed to around INR 800/mt ($10/mt) from around INR 1,200/mt ($14/mt) a week ago, on ex-plant basis.