Ex-India pellet prices have suffered major setbacks after high volatility wiped off early gains as buyers from China beat a hasty retreat amid the weakening of the demand outlook, SteelOrbis learned from trade and industry circles on Friday, February 3.
Ex-India pellet prices moved up to $128-130/mt CFR China early in the week, up from $118-125/mt CFR, as business activity resumed and buyers from China returned. But prices rapidly lost ground to the level of $115/mt CFR at the highest with buyers pulling out of the market on reports of a lower raw material demand forecast, with mills in China shifting to fines, and several unconfirmed reports in the local market of payment defaults by at least two buyers for deals concluded at pre-holiday peaks.
Only one relatively small-volume deal was concluded by a pellet-producing arm of an Odisha-based integrated steel mill for 20,000 mt, before the market downslide at $115/mt CFR, sources said.
“The high volatility and ultimate losses in deal prices belied all expectations of strong overseas sales after China’s holiday. The sharp reversal in market conditions and sentiments seen over the week are largely owing to uncertain margins from current steel price for mills in China. This in turn is prompting a large shift from pellets to lower grade fines,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“We have received reports of port stocks at China at around 6 million mt which is on the higher side,” he said.