Ex-India pellet prices have plunged further below a three-month low with both buyers and sellers retreating as severe bearish conditions have emerged in the market and there is a forecast of a strong decline in demand for raw materials in the blast furnace sector in China, SteelOrbis learned from trade and industry circles on Friday, April 28.
Ex-India pellet prices have slumped to levels of $105-108/mt CFR China, but still neither buyers nor sellers have been willing to conclude deals in the downward spiralling market. This compares to the ex-India prices in the range of $115-120/mt CFR prevailing a week ago.
“Demand in China has taken a hit for both the short and medium terms. In the short term, the approach of the May Day holiday has prompted buyers not to make any new commitments. For the medium term, the recovery of margins from finished steel sales prices has been below expectations, prompting blast furnace operators to continue to use lower grade cheaper fines,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“Furthermore, we are hearing that, in view of weak finished steel prices, blast furnace operators in China are going in for maintenance shutdowns, with a negative impact on aggregate raw material demand,” he said.
According to available industry data, pellet stocks at ports in China are estimated at 7 million mt. Pending ex-India pellet shipments against previous contracts are estimated at 150,000 mt, for which loading would commence from the first week of May. This, according to local industry insiders, means there are very high volumes still in the supply line and, considering the fall in demand, buyers are seen to be retreating from the local market.