Ex-India pellet prices have suffered setbacks over the past week amid fewer active buyers with low bids and weak demand in China, but the mood among producers has remained bullish in the local market, where they have been hiking prices riding on robust sales volumes, SteelOrbis learned from trade and industry circles on Friday, January 23.
Sources said that ex-India pellet prices are down an average of $5/mt to the range of $115-120/mt CFR China, with the price at the higher end of the range applicable for high grade with silica-alumina content of less than three percent. But the few buyers present in the market were heard to be submitting bids at lows of $110-112/mt CFR, unacceptable to sellers, and so no deals have been reported over the past week.
However, despite the lack of sales overseas, the mood among sellers has remained bullish supported by sustained local sales volumes. This prompted producers to start hiking domestic prices, led by large producer Jindal SAW Limited which increased its price by INR 600/mt ($7/mt).
It was pointed out that, with local sales realizations exceeding export margins by INR 800-1000/mt ($9-11/mt) on ex-plant basis, most producers have been holding back volumes for export and diverting port stocks for sales inland.
“Mills in China are optimizing input costs and avoiding the use of higher-priced feedstock like pellets. Hence, port stocks are sufficient to meet the resultant low demand for high-priced pellets. The low bids are not working out for sellers as the latter are very comfortable with local demand and prices,” a member of the Pellet Manufacturers Association of India (PMAI) said.
“Sellers will wait and watch for now and await improvements in the market after the Lunar New Year holiday in China and largely avoid building up stocks at ports for export,” he added.