Ex-India pellet prices have slumped and breached the $100/mt CFR mark to touch a four-year low, but, with bids received being even lower, sellers have completely exited the export market, SteelOrbis learned from trade and industry circles on Friday, April 5.
Ex-India pellet prices have fallen to the range of $92-98/mt CFR China, down from $107-109/mt CFR a week ago and, though no trades were reported during the past week, some local producers have reported bids received at as low as $90/mt CFR, indicating the extreme bearishness of market conditions.
According to the sources, current export prices are lower than even the ex-plant price of most pellet producers. They said that domestic pellet prices have also fallen over the past week, but realizations from local sales are still higher than those from exports by around $15/mt.
“No pellet producer can sell below the $100/mt CFR mark with negative margins. Some pellet producers with large stocks at ports are caught in a panic. They cannot sell at current prices. Nor can they divert the volume to domestic sales as it would entail very high transportation and logistical costs to deliver to local mills deep in the hinterland,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“We can only sit back and wait for a market improvement. And the wait looks to be a long one too. There is a serious demand depression in China. Port stocks are also on the higher side. Mills in China are also looking at output cuts to support local prices. This will contribute to a long-term demand suppression for raw materials,” he said.