The downtrend of ex-India pellet prices has gained momentum over the past week, with buyers from China retreating as Chinese mills rationalize raw material requirements amid uncertain finished steel prices and the shift to fines, the prices of which have been softening steadily, SteelOrbis learned from trade and industry circles on Friday, June 12.
Sources said that ex-India pellet prices have slumped by $4/mt to the range of $111-114/mt CFR China, with buyers resisting higher prices and pulling back as high-priced raw material are not supported by current finished steel prices in China and mills have been shifting to fines, the prices of which have been declining.
According to the sources, local pellet producers, which had shifted volumes from inland yards to port stockyards to increase export volume offers, have been holding back from concluding deals due to weak prices, as the bid-offer gap has not met expectations.
It is learnt that several cargoes booked earlier are lying unsold in China as pellet prices have been losing competitiveness as the preferred raw material in the absence of any uptick in the finished steel market.
“Local producers are mostly busy with cargo loading for deals concluded earlier. Both buyers and sellers are on a pause, reassessing the new pricing trend. We expect ex-India prices to lose another $2-4/mt in this cycle,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“The price gap between export and domestic sales realizations is not more than INR 300-500/mt ($3-5/mt) and sellers therefore have limited options to choose from. Producers will need to strategically balance domestic sales and export allocations now that both prices are showing declines,” he added.
