Ex-India pellet prices have declined sharply over the past week in the absence of buyers ahead of the long holiday in China, coupled with the negative outlook on demand, SteelOrbis learned from trade and industry circles on Friday, February 9.
Ex-India pellet prices have lost $7/mt to $125-130/mt CFR China, but even lower levels did not attract any buyers and no deals were done amid reports that mills in China had concluded restocking of raw materials well ahead of the Lunar holiday.
Sentiments also took a beating from reports that mills in China will be going in for maintenance shutdowns, prolonging the low raw material demand scenario during the holiday.
According to sources among pellet plant operators, the post-holiday outlook in China is also negative as margins from finished steel have not recovered as expected and mills are unlikely to increase use of higher-priced pellets and are likely to rely on fines instead.
“The holiday in China is only one reason for the fall in pellet prices. Maintenance shut-downs of mills and oversupply will continue to exert pressures in the medium term. This is indicated by the weakening of futures contracts,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“There have not been any confirmed deals in February. Even after the fall in ex-India prices, the bid-offer gap is still too wide for sellers to conclude contracts. The highest bid we have heard ranged around $115/mt CFR and sellers are preferring to hold back deals and wait for a turnaround,” he said.