Ex-India pellet prices have breached the floor of $100/mt CFR as the market downtrend has continued from poor raw material demand amid production cuts by mills in China and sufficient stocks of preferred low-grade ore in China, SteelOrbis learned from trade and industry circles on Friday, May 5.
Ex-India pellet prices have been reported in the range of $96-100/mt CFR China with no premium for higher grades with alumina content of three percent or less, but still no major deals have been concluded over the past week. This compares to prices of $105-108/mt CFR a week ago.
A sole small-tonnage deal of 25,000 mt was reported by an Odisha-based pellet plant at $97/mt CFR, for an undisclosed destination in Southeast Asia, trade circles confirmed.
“The fundamentals of demand in China are very weak. Mills are heard to be cutting back production to support finished steel prices and there are sufficient stocks at mills and ports to meet lower raw material demand and there is no interest in seaborne trade,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“The sub-$100/mt price realization currently offers no positive margins for sellers, and hence the latter are not even submitting offers. Local producers are only hoping for some positive trend as business activity gains momentum after the May Day holidays. But chances are slim because the fundamentals of the market are in deep negative territory,” he said.
Elaborating on the negative realizations, an official at a large Odisha-based pellet producer said that, at current export prices, realizations on ex-plant basis work out at an average of INR 6,000/mt ($73/mt), while domestic sales realizations current average around INR 8,700/mt ($106/mt), making overseas sales unviable.