The downtrend in ex-India pellet prices has gathered momentum and even deep discounted offers have failed to attract any buying, leading to near stagnant trade activity, SteelOrbis learned from trade and industry circles on Friday, March 15.
Ex-India pellet prices have slumped by $7/mt to the range of $115-120/mt CFR China, but no buyers have responded to the lower offers.
According to the sources, some pellet producers with large stocks at port stockyards are heard to have submitted deep discounted offers at as low as $105-112/mt CFR, but they still could not conclude any deals.
“Demand for pellets in China is at a very poor level. Current prices are not viable for us. Exporters who had built up large stocks at ports anticipating strong restocking post-Lunar holiday in China are pushing sales at very low prices, but still there are no buyers. The market sentiment is so bad that we are fearing prices will go below the $100/mt CFR mark. Whether there will be sellers at that price is still to be seen,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“Also, on the supply side, some pellet plants in eastern India have gone in for maintenance shutdowns. But it is unlikely to ease supply-side pressures as most plants are carrying large inventories. On the demand side, mills in China are not interested in higher-priced pellets when finished steel margins are weak and have shifted to low-priced fines,” he said.
According to another producer, the gap between domestic sales realizations and exports has improved further to INR 1,300/mt ($15/mt) on ex-plant basis, increasing the disincentive to sell overseas.
He said that, though local sales are more remunerative, the aggregate output of the domestic pellet industry could not be absorbed by local steel mills and, hence, producers will have to be reconciled to lower export prices in the medium term, as there is no alternative to exports to maintain current output levels.