Ex-India pellet prices have continued to firm up over the past week, triggering a surge in trading activity amid a rise in buying interest and with sellers becoming active in pushing overseas sales as the difference between export and local sales prices has narrowed, while some deals have been kept pending, with sellers awaiting a further consolidation of the market, SteelOrbis learned from trade and industry circles on Friday, January 24.
Sources said that ex-India prices have gained around $3/mt to the range of $114-116/mt CFR and, while trade volumes have surged amid positive movement of sentiment in China, a few deals early in the week were at the lower end of the range, while many producers were heard to be holding back stocks at ports, waiting for the uptrend to gain momentum.
Two Odisha-based pellet producers have concluded deals aggregating 110,000 mt for end-of-February delivery at $114-115/mt CFR, while another deal has been confirmed by a third producer for 50,000 mt at $113/mt CFR, sources said.
According to the sources, sellers became more aggressive in making deals after the latest surge in ex-India prices had narrowed the gap between export and local sales margins to just INR 700/mt ($8/mt) on ex-plant basis.
They said that many eastern India-based pellet producers were keeping stocks ready at ports but were holding back from deals, expecting a further upward movement of ex-India prices, which would cause export sales realizations to exceed local sales margins, enabling producers to commit higher volumes for exports.
“We are receiving higher number of inquiries from China at a higher frequency. There is a lot of optimism on the price front. Hopefully, it will gain some more and once the gap between export and local sales realizations is bridged, it will remove the hesitancy of some sellers to commit volumes and conclude early deals,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“However, we should also exercise caution over irrational exuberance regarding the current uptrend sustaining or gaining momentum. Mills in China may be close to completing restocking ahead of the holiday. So, there are risks of a slowdown in market activity in the short term and its impact on prices,” he said.