Ex-India pellet prices have edged lower amid weakening futures prices and sentiments in China coupled with rising production by local plants, but the sharper fall was checked by increasing bookings by domestic mills, SteelOrbis learned from trade and industry circles on Friday, September 2.
Ex-India pellet prices have declined to $92-94/mt CFR China compared to levels of $94-98/mt CFR a week ago and, even though current prices are either equal to or lower than the landed price of fines in China, no deals were reported as mills have been unsure of whether to increase output of finished steel.
Industry circles said that the aggregate monthly output of local pellet plants has been averaging at around 6 million mt, 7-8 percent higher than the corresponding period of last year. However, higher monthly output and lack of overseas sales did not have the expected negative impact on prices as domestic mills have been increasing pellet as the preferred blast furnace feedstock over lumps during the rainy months.
The sources pointed out that, in view of higher bookings by local mills, domestic pellet prices have risen by INR 700/m ($9/mt) to INR 8,600/mt ($109/mt) ex-works, and hence domestic sales are more viable than exports with the additional 45 percent levy.
“Most pellet plants in Odisha in the east and Chhattisgarh in the central region have been successful in increasing domestic sales particularly to mills located in the west and southern parts of the country. Local price realizations are also higher than current export price levels. Hence, the impact of the lack of export deals has to some extent been mitigated. This is of course in the short term because mills will tend to increase fines consumption once the winter season sets in,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.