Ex-India pellet prices have remained under pressure in the past week sinking below a two-month low and, even though higher buying interest was reported from China, bids have been too low for sellers to conclude any deals during the week, SteelOrbis learned from trade and industry circles on Friday, June 13.
Sources said that ex-India pellet prices have lost $3/mt to the range of $99-101/mt CFR China. However, buyers representing China showed interest in higher grade pellets with silico-alumina content less than two percent, but were quoting bids in the range of $90-94/mt CFR, which was too low for Indian sellers to negotiate any deals successfully.
They said that, firstly, the bid-offer disparity was too large for sellers to even begin negotiations. Secondly, the bids were for higher grade pellets are in limited demand by mills in China, but Indian sellers do not have ready port stocks for such grades and this was a secondary reason for rejecting the bids.
Domestic sale realizations exceed export margins by around INR 1,700/mt ($20/mt) on ex-plant basis after consecutive weeks of falls in export prices, and hence local sellers have no incentive to sell overseas and have almost completely exited exports, the sources said.
“Buyers are expecting too large a discount and that too for the highest grade of material. Such deals are not viable,” a member of the Pellet Manufacturers’ Association of India (PMAI said.
“It is better to wait and watch to see any shift in the demand pattern among Chinese steel mills. But we are maintaining a bearish outlook on overseas sales as finished steel prices remain under pressure and mills in China are unlikely therefore to opt for higher-priced feedstock like pellets,” he said.