Ex-India pellet prices showed tentative signs of a recovery on back of reports of drawdown in stocks in China, hopes of improved demand and lower output from local plants but trade volumes remained low as numbers of bids still remained limited, SteelOrbis learned from trade and industry circles.
Ex-India pellet prices were up by $15-20/mt over the past week with price for lower grade pellet with silica-alumina content more than 3 percent were reported in the range of $111-115/mt CFR and higher grade with silica-alumina content less than 2 percent at $125-130/mt CFR.
Sources said that a government run pellet producer which had earlier failed to conclude an export tender for 50,000 mt was successful in closing a fresh round of bid receiving highest bid of $125/mt CFR, improving the overall mood in the market.
An Odisha based pellet plant linked to an integrated steel mill reported a deal for 30,000 mt for end June shipment at $118/mt CFR.
However, most industry majors said that the number of bids received in the market is still on the lower side, and buyers, particularly China-based, though more optimistic than before on demand improvement combined in fall in stocks, are still waiting for some consolidation of the latter before committing trades.
It was heard from industry leaders that price improvement is largely driven by supply side tightening as domestic pellet plant output is expected to be low over the next two months, at least.
Industry estimated that monthly domestic pellet production was expected to fall by at least 30 percent over May-June as several pellet plants are taking maintenance shutdowns as current export realizations from current prices is still low and operating costs are rising.
“Realizations from export sales are still INR 500/mt ($6mt) lower than domestic sales even after the latest revival seen in export markets,” a member of Pellet Manufacturers’ Association of India (PMAI) said.
“The fundamentals of the market, in terms of finished steel prices, stock levels and raw material demand, led by China are showing tentative signs of improvement. But the revival will be slow. Hence local pellet plants are taking strategic time out to go in for maintenance in the meantime,” he said.