Ex-India pellet prices continued to edge up on back of strong performance of fines in China but sellers were still holding back deals waiting for further consolidation to be able to offset rising fines price locally and margins touch at par with local sales, SteelOrbis learned from trade and industry circles on Friday, July 18.
Sources said that ex-India pellet prices gained $2/mt to range of $103-105/mt CFR China and around $107/mt CFR for higher grades with silica-alumina content less than 3 percent.
However, sellers were holding back deals targeting ex-India price of $110-113/mt CFR which would enable sellers to pass on rising local price of fines and higher logistical and transportation price during current monsoon rainy season.
Also, local sales offer better margins of around INR 1,600/mt ($19/mt) on ex-plant basis in Odisha and ex-India price would need to consolidate further for it to become more attractive for sellers to divert local volumes for overseas sales, the sources said.
The sources pointed out that following recent rebound in iron ore fines prices in China has sharply reduced the differential with imported pellet price as pellet price increases have been comparatively more sluggish. Hence, pellet prices need to consolidate at higher levels of at least $113/mt CFR for Indian sellers to push overseas sales.
“With fines prices increasing in China, the outlook is definitely better than few weeks ago. But the improvement in sentiments is not translating into deals at improved prices. Chinese mills are not showing much interest in pellets except for small volumes of higher grades,” a member of Pellet Manufacturers’ Association of India (PMAI) said.
“Indian sellers can continue waiting on the export front while still focussing on robust demand and price in the domestic market. Ex-India price needs to show higher gains of $7-10/mt week-on-week for local sellers to return to export segment,” he said.