Ex-India pellet prices have softened in the past week amid a combination of buyers from China retreating and local pellet producers pausing exports after delaying procurement of iron ore fines given the uncertain price trend, SteeOrbis learned from trade and industry circles on Friday, May 23.
Sources said that ex-India pellet prices have edged $1/mt lower to the range of $107-109/mt CFR China.
They said that the short-lived uptrend has been reversed by buyers retreating as mills in China were preferring iron ore fines from portside stocks over costlier feedstock like pellets.
At the same time, a few buyers representing mills in China were heard to be enquiring for high grade pellets with silica-alumina content of less than one percent but not readily available from Indian pellet producers.
Sources said that several local pellet plants have paused procurement of fines from mines at current prices with the auctions of fines held by government-run Odisha Mining Corporation (OMC) fetching low prices and given the possible lower overall merchant trade prices of fines charged by miners.
The only trade reported during the week in review was a tender-based sale of 50,000 mt by a southern India-based producer which reportedly fetched a highest bid of $101/mt FOB, the sources said.
“We are hearing that mills in China are cautious in purchasing raw materials and still awaiting a stronger recovery in finished steel margins. The mills are just replenishing the drawdown in iron ore stocks from portside stocks and are not restocking by increasing exposures to sea-borne cargoes entailing extended delivery timelines,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“From the sellers’ point of view, the fundamentals of the raw material market remain weak. Local sales margins are INR 1,450/mt ($17/mt) higher than overseas sales and hence the domestic market will remain the mainstay for sellers as we do not expect export demand to strengthen in the short term,” he said.