Ex-India pellet prices have been pushed up marginally over the past week as sellers have attempted to pass on higher prices of local fines, but this has pushed buyers further away to the sidelines as mills in China have been refraining from purchasing higher-priced raw materials in an effort to optimize steel margins, SteelOrbis learned from trade and industry circles on Friday, April 4.
Sources said that ex-India pellet prices have been nudged up by $1/mt to the range of $109-110/mt CFR China, but this has been sufficient to trigger strong resistance from buyers and no deals have been confirmed over the past week.
According to the sources, exports being in a doldrum is not of much concern for local producers against the backdrop of robust domestic sales volumes and realisations.
Local sales have continued to fetch margins around INR 1,800/mt ($21/mt) better on ex-plant basis than exports, and hence there has been a sharp drawdown on port stocks as more volumes get diverted for sale in the hinterland.
Furthermore, with the local currency appreciating against the US dollar from lower than INR 87.00 a dollar to INR 85.50 to the dollar, this has eroded the exchange rate benefits of export earnings, the sources said.
“Producers are having higher price expectations, which are realised through local sales but not overseas sales. Buyers are resisting higher prices. Mills in China are finding local raw materials and port stocks to be more viable on the cost front, amid efforts to optimise margins at a time when finished steel prices are not hardening as expected,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“We expect the bid-offer disparity to keep exports quiet, while local sales continue to remain the focus,” he added.