Ex-India pellet prices have moved up over the past week even in the absence of any buying as producers have attempted to factor in the rising price of iron ore fines in the local market supported by robust large-volume bookings reported by large domestic steel mills, SteelOrbis learned from trade and industry circles on Friday, August 15.
Sources said that ex-India pellet prices have gained around $3/mt to the range of $107-111/mt CFR China, with the price at the higher end of the range effective for higher grade ores with silica-alumina content less than three percent.
However, no deals were confirmed during the past week as mills in China continued to be unwilling to look at higher-priced raw materials, while on the other hand sellers were unwilling to push exports at a time when margins from local sales have continued to be significantly higher and with large volumes sought by local mills, the sources said.
The largest domestic producer NMDC Limited has hiked prices of all grades of iron ore for the current month setting a benchmark, followed by significant increases effected by private mines in Odisha. Pellet producers too have been quick to take the cue to factor in the rise in raw material prices and higher transportation costs during the monsoon season to quote higher offers despite the absence of overseas buying.
A large part of port stocks for export allocation have been diverted to inland stockyards to meet domestic demand and, according to industry estimates, the deal size in local sales now averages around 50,000 to 100,0000 mt, indicating strong demand for pellets.
“Globally mills in China are adjusting production schedules. We hear some production cuts have supported prices of finished steel. There is raw material restocking but most are looking lumps and fines and not pellets owing to strict cost management. On the other hand, local pellet sales are still fetching INR 1,700 /mt ($19/mt) higher on ex-plant basis, and hence the diversion of export allocations to local sales,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“So irrespective of ex-India price movements, export deals will remain subdued until demand in China sees a sharp uptick,” he added.