Ex-India pellet prices have lost ground in the absence of buyers representing mills in China and with Indian sellers focusing on domestic sales which are fetching better prices, SteelOrbis learned from trade and industry circles on Friday, May 17. However, since the mood in the Chinese market over the past few days has improved and futures prices have been going up, better demand for iron ore may be seen in the near future.
Sources said that ex-India pellet prices are down by $3-4/mt to the range of $117-118/mt CFR China, but no deals have been reported, with buyers having retreated from the market, while sellers are generally not submitting offers.
A southern India-based pellet producer which had floated an export tender for 50,000 mt did not conclude any contract as the bids received fell far below expectations.
According to officials at two large Odisha-based pellet producing plants, domestic sales realizations were on average INR 1,200/mt ($14/mt) higher than export prices on ex-plant basis and hence producers are not only seen to be focusing on local sales, but several with port stocks diverted exportable volumes to local mills.
“Ever since the Labor Day holiday, mills in China have been facing challenges of maintaining finished steel margins and hence are not looking at higher-priced ex-India pellets as a raw material. The demand is more for blending various grades of iron ore, which works out more competitive compared to pellets,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“The absence of export trades through the current month is not a big concern for producers as they are getting good demand from local mills. The higher local price has enabled most producers to even liquidate much of the port stocks meant for export shipments. Hence, the loss in ex-India prices is not a worry for most plants,” he said.