Ex-India pellet prices have suffered setbacks amid the widening of the bid-offer gap, while local sellers have started to reject lower offers amid robust local sales, SteelOrbis learned from trade and industry circles on Friday, December 13.
Ex-India pellet prices are down $3-5/mt to the range of $113-117/mt CFR China, while bids submitted by Chinese buyers have been lower in the range of $110-113/mt CFR.
There are unconfirmed reports that an eastern India-based producer has concluded multiple deals for undisclosed volumes at $112/mt CFR, which the sources claimed could be of lower grade with alumina-silica content of more than six percent.
Citing reports received in India, the sources said that indications of a further economic stimulus from the Chinese government have improved sentiments, but this has yet to be translated into deals at an improved price line. On the contrary, the upward trend has been reversed as buyers are quoting lower bids perceiving that the pellet seaborne market had risen too much too fast at a time when iron ore fines prices and futures prices were softening in China.
“The fall in the ex-India price is making domestic sales more profitable. Indian mills are booking large volumes like a Gujarat-based mill concluding a large-volume purchase of 60,000 mt from an Odisha-based pellet plant,” a member of the Pellet Producers’ Association of India (PMAI) said.
“Indian pellet producers are very strategic in selling currently. Given robust domestic demand, they are not accepting low bids. In terms of strategic supplies, eastern India-based pellet producers are keeping port stocks ready. They will either use coastal transportation to ship volumes to domestic mills or conclude overseas sales depending on which is a better price,” he said.
However, according to another official with a pellet producing arm of an integrated steel mill, optimism on exports is still strong and there are high expectations that the workable ex-India price will edge up in the coming weeks riding on late January deliveries under negotiation as part of restocking ahead of the Chinese New Year. He said that reports indicate that port stocks in China are down to 0.55 million mt, which would support restocking.