Ex-India pellet prices have showed signs of a recovery amid the emergence of fresh buying reported to have been triggered by the fall in port stocks in China, even though finished steel prices continue to weaken and a few mills are implementing maintenance shutdowns, SteelOrbis learned from trade and industry circles on Friday, August 9.
Sources said that ex-India pellet prices increased to a range of $109-112/mt CFR China with most of trades concluded at higher end of the range, compared to $107-109/mt CFR prevailing in earlier week.
The sources said that an Odisha-based pellet producer has concluded a large-volume deal for 75,000 mt at $111/mt CFR, while another seller also based in the same region has reported a trade for 50,000 mt at a slightly lower price of $109/mt CFR.
A southern India-based pellet producer has confirmed a deal for 50,000 mt at $110/mt CFR, the sources said.
“Sellers who had retreated from the market owing to low realisations from exports started offering large volumes following a slight increase in acceptable prices. But we are still cautious over whether the uptrend will be sustained and will gather momentum, because in our assessment, restocking is largely driven by a fall in port stocks in China, while actual demand from mills can be expected to remain weak as finished steel prices are still under pressure,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“Also, even though the gap between export and local sales realisations has narrowed, local sales margins are still INR 600-700/mt ($8-9/mt) better than overseas sales on ex-plant basis. This will rein in producers offering more volumes for export going forward,” he said.