Ex-India pellet prices have remained stable over the past week but are largely considered “irrelevant” with neither buyers or sellers active in the market, SteelOrbis learned from trade and industry circles on Friday, July 8.
Sources said that ex-India pellet prices have remained unchanged at $128-132/mt CFR China but, while buyers were not putting in bids in view of falling margins of steel in China and are also unsure of local sellers’ ability to deliver absorbing the recent 50 percent export tax.
The sources said that industry estimates available indicate that Indian exports of pellets have been on a steady decline since the imposition of the export tax in late May 2022 and are well on the way towards a zero level. Unofficial industry estimates indicate that Indian pellet exports were down to a level of 60,000-70,000 mt in June this year, after averaging slightly above one million mt per month before the levy of the export tax.
Citing “despondent market conditions” at least two sources said that a pellet-producing arm of an Odisha-based steel mill floated a large tender-based export offer of 50,000 mt of high grade pellet for September delivery, but it did not receive any bid. Unconfirmed reports indicated that the internal reserve price set for the tender offer was $130/mt CFR.
“Fundaments in key consuming countries are very weak. Margins in finished steel prices are almost at distress level in China. There are heavy supply-side pressures from iron ore and mills facing a squeeze on margins are shunning higher-priced pellets,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“But in the case of India, the export tax has been the death knell. In another two to three months, shipments will come to zero. There are no more options available for pellet plants to further cut down on capacity utilization. Closing down plants is now a matter of months as has already been done by state-run pellet producer KIOCL Limited,” he said.