Ex-India pellet prices have continued to lose ground during the past week in the absence of buyers, with no improvement in demand seen in China, while sellers have pulled out from offering volumes for overseas sales owing to unviable bids and the shortage of availability of iron ore fines from domestic mines, resulting in inactive market conditions, SteelOrbis learned from trade and industry circles on Friday, August 8.
Sources said that ex-India pellet prices have lost $2/mt to the range of $104-108/mt CFR China. The higher end of the price range is effective for higher grade pellets, which is also significantly lower than around $115/mt CFR a week ago, but no such grade was put up for export offer.
According to the sources, stray bids were reported at least $8-10/mt lower. At the same time, local pellet producers have been seeking prices of at least around $115-120/mt CFR for export sales to be viable and just about compensate for the higher input cost of fines and the shortage stemming from monsoon rains and challenging pithead-to-plant transportation costs.
It was pointed out that, with stable domestic prices, the falling ex-India price had widened the gap between local versus export sales realizations at a differential of around INR 2,000/mt ($23/mt) on ex-plant basis. Hence, most pellet producers were pulling out export allocations and diverting them to local sales, the sources said.
“There is no significant improvement in demand or the price outlook in China. Indian sellers see no justification in keeping export allocations at port stockyards and prefer to keep ready volumes for local sales offering better margins,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“The minimum price expectation is $115/mt CFR, but we do not see that coming on the export front. Domestic sales will remain the short- and medium-term focus,” he added.