The downtrend in ex-India pellet prices has gained momentum in reaction to the weakness seen in the iron ore fines spot and futures markets in China and with mills unwilling to use higher-priced pellets at a time of falling prices of fines and unstable finished steel prices, SteelOrbis learned from trade and industry circles on Friday, May 30.
Sources said that ex-India pellet prices have fallen by around $3/mt to the range of $104-106/mt CFR China and sellers have been unwilling to push deals at these lower levels.
According to the sources, a southern India-based pellet producer has concluded a tender-based sale for 50,000 mt, with reports indicating the highest bid received at $96/mt FOB, lower than the highest bid of $101/mt FOB received in an export tender for a similar tonnage in the previous week.
It was pointed out that domestic pellet prices have also been on a downtrend but at a slower pace compared to export prices. Margins from local sales are still INR 1,600/mt ($19/mt) higher than from export sales, with producers continuing to focus on sales to domestic steel mills.
“The demand outlook in China is negative with lots of talk of mills taking a production cut during the rainy season and weak finished steel prices. This is weighing in on iron ore fines spot and futures trades. Mills are not looking at higher-priced imported pellets,” a member of the Pellet Manufacturers’ Association of India (PMAI) said
“But in the local market challenges are brewing for pellet producers. The emerging weakness in the market of semis will make it difficult for pellet sellers to sustain higher prices in local sales too. Monsoon rains spreading across India will also dampen local demand for pellets. So, both export and local pricing will get more challenging going forward,” he said.