Ex-India pellet prices have firmed up over the past week riding on renewed buying interest as increased prices of lumps in China triggered a shift to pellets, while the consolidation seen in the local market limited the volume offered for overseas sale, SteelOrbis learned from trade and industry circles on Friday, March 13.
Sources said that ex-India pellet prices have gained $4-6/mt to the range of $113-118/mt CFR China, with the price at higher end of the range applicable for high grades with silica-alumina content less than three percent.
According to the sources, a trade for 50,000 mt (silica-alumina content of six percent) was concluded at around $116/mt CFR, while another sale of 40,000 mt was completed at $114/mt CFR the sources said.
At least two traders said that rising freight costs from surges in fuel prices in the wake of the war in the Middle East provided the most significant headwind for sellers to increase export activity. They said that higher freight charges had reduced FOB-based realizations of sellers, limiting their profitability from selling overseas.
At the same time, most large pellet producers increased local sales prices by around INR 300/mt ($3/mt), improving margins from domestic supplies and hence producers have not been allocating higher volumes for export, the traders said.
“The rise in premiums on high grade lumps in China triggered improved buying interest for ex-India pellet as feedstock for some mills. The current reality is that there are comparatively more active buyers in the market over the past week but fewer sellers interested in pushing sales,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“The rising freight costs are being translated into higher CFR-based prices but not so much in FOB prices, and hence margins of sellers are not improving as fast as local sales are offering. Local demand and prices remain robust and producers are keeping export allocations on the lower side,” he added.