Ex-India pellet prices have reversed previous declines and edged up over the past week, but deals have been stalled by the wide bid-offer difference amid cautious buyers and transportation cost hurdles, SteelOrbis learned from trade and industry circles on Friday, April 3.
Sources said that ex-India pellet prices have inched up by around $2/mt to the range of $115-120/mt CFR China, with the price at the higher end of the range applicable for high grades with silica-alumina content less than three percent.
According to the sources, there was a slight improvement in demand as reflected by the increase in active buyers in the market, but bids received were at around $112-114/mt CFR, below the expectation of sellers and leading to silent trade conditions.
The sources said that, despite the rise in CFR prices, FOB prices have largely remained unchanged at $101-105/mt, indicating that the price increase was due to freight costs and not an improvement in the margins of sellers.
Domestic pellet prices were also increased by local producers, after which the differential between domestic sales and export realizations widened to INR 1,475/mt ($16/mt), from INR 1,400/mt ($15/mt), on ex-plant basis.
“Exports are still not viable as the bid-offer differential is very wide. The higher ex-India price is only because of higher freight rates. In our assessment, CFR prices need to consolidate at around $125-130/mt CFR for sellers to push deals. This assumes freight rates remain stable, which is very optimistic considering the continued geopolitical tensions,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“Overseas demand is there but buyers are still very price-sensitive. Mills in China are preferring lower-priced fines as it enables them to better manage raw material costs and protect margins from finished steel in volatile market conditions,” he added.
