Ex-India pellet prices have remained stable over the past week and, barring stray deals for the highest grades, export trade activity has remained largely negligible owing to low bids for other grades not aligned to the product costs of sellers and robust domestic demand, SteelOrbis learned from trade and industry circles on Friday, August 1.
Ex-India pellet prices are stable in the range of $107-115/mt CFR China with the price at the higher end of the range effective for high grade pellet with silica-alumina content less than three percent.
However, the sources said that for average and normal grades bids received were lower, stalling any successful deal as such low prices were not viable as the costs of production were rising on the back of the higher price of fines and increased transportation costs during the rainy season.
An exception to the overall minimal trade activity was a large-volume deal for about 80,000 mt for October shipment reported by an eastern India-based producer for high grade pellets with alumina content less than 1.5 percent at $118-120/mt CFR.
Another producer reported a tender sale of 50,000 mt of pellets with alumina content less than two percent at $115/mt CFR, the sources said.
“A few deals during the week reflected that there is demand for very high-grade ore. But this is not reflective of the overall muted trade conditions as such grades are a very small part of the overall market. Low bids for normal and average grades are unworkable as the cost of production is rising and at the same time robust domestic demand is sustaining and a more preferred sales option,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“Domestic margins exceed export margins by around INR 1,750/mt ($20/mt) on ex-plant basis and hence producers are maintaining very low stocks at ports and diverting most volumes to local mills in the hinterland,” he said.