Ex-Indian pellet prices have lost ground amid negative demand expectations in China and the declines in the local market following the rise in inventories, SteelOrbis learned from trade and industry circles on Friday, February 23.
Ex-India pellet prices are down around $5/mt to the range of $120-125/mt CFR China and no deals have been confirmed in the market for the second consecutive week.
The sources said that the market mood turned negative following reports of a demand depression in China, with post-holiday restocking expected to be deferred with a number of mills going in for maintenance shutdowns.
Also, with finished steel prices not recovering as expected, mills in China could be expected to rely on cheaper iron ore fines as feedstock and reduce restocking with higher-priced pellets.
Officials at Indian domestic pellet plants said the weakening of ex-India prices is also a reaction to the rise in local inventories after the prolonged lull in trade in China and domestic mills reducing off-takes. They said that large Indian pellet producers including Jindal SAW Limited and Godavari Power and Ispat Limited (GIPL) have led in cutting domestic prices by INR 300-400/mt ($4-5/mt) over the past week, as most producers are carrying large inventories in stockyards.
“Buyers from China have been absent from the market and are showing no interest in restocking even after the holiday. This is one indication that the current finished steel price recovery has been slow and does not support aggressive raw material purchases. Iron ore prices in China are recovering but not those of pellets,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“We are still hoping of some revival of trade activity and prices as business gathers pace in China. But that is with cautious optimism because the demand outlook does not look good. Even if buyers return, it may not lead to an immediate price recovery because every pellet producer has high inventories at ports and plant stockyards needing to be liquidated,” he said.