Ex-India pellet prices suffered setbacks from a correction from pricing rising too fast recently and buyers resistance with many taking a pause in concluding contracts after submitting bids over the past week, SteelOrbis learned from trade and industry circles on Friday, August 1.
Sources said that ex-India pellet prices declined about $3/mt to range of $106-111/mt) CFR China. Higher grade fines (silica-alumina content less than 3 percent) prices were quoted at around $115/mt CFR down from levels of $117/mt CFR a week ago.
The sources said that a large volume deal estimated at 75,000 mt was concluded by an Odisha based pellet producer with a South Korean buyer but no details were confirmed by either the buyer or the seller.
Another eastern India based seller reported a trade for 50,000 mt high grade pellet through a tender against which it received highest bid of $114/mt CFR, sources said.
“Pellet prices, largely driven by rising price of fines, has surged too fast without commensurate demand support. A price correction was very much expected and buyers are showing resistance by deferring deals,” a member of Pellet Manufacturers’ Association of India (PMAI) said.
“From sellers’ point of view, a price below $115/mt CFR is not acceptable. But buyers are unwilling to bid anything above $110/mt CFR. Finished steel prices are not improving as per expectations and the mills in China are still preferring lower priced fines as feedstock and unwilling to use higher priced pellets until such time margins from finished steel consolidates,” he added.
According to a steel sector analysts, pellet prices could get back on a more sustained uptrend if the Chinese political leadership announces economic and infrastructure stimulus at the Politburo meeting.
Until then local pellet producers will remain focused and confident on local sales which is still fetching INR 1,800/mt ($21/mt) better margins compared to overseas sales, on ex-plant basis, he said.