Ex-India pellets prices have showed volatility and have failed to hold on to the gains early in the week, with sellers still disappointed with realization levels and, though the number of bids was heard to have increased, none were converted to deals, SteelOrbis learned from trade and industry circles on Friday, June 2.
Ex-India pellet prices surged to $123-128/mt CFR early in the week, but settled lower at $110-115/mt CFR, down from $120-123/mt CFR a week ago.
The sources said that early gains were attributed to the revival of sentiments in China, but this did not translate to deals as buyers view the higher price levels as “speculative and futures driven” while sellers felt margin realizations were still not attractive enough considering the rising cost of production of local plants.
“It is a strange situation in the market which we feel is speculation-driven. For example, early in the week sellers were reporting submission of offers at higher levels, but when it came to receiving actual bids, the latter were as low as $105-108/mt CFR. So, it is either buyers’ resistance to higher prices that continues or speculators are active and are bottom fishing,” a member of the Pellet Manufacturers Association of India (PMAI) said.
“No Indian pellet producer will sell at current bids of $105-108/mt, when the local pellet price is around INR 82,000/mt ($100/mt) ex-plant Barbil in Odisha. Of course, the increased activity of buyers is a positive. Sellers, however, will await for the positive sentiment to translate to improved prices and realizations. Until then, we assess that ex-India pellet trade will remain in the doldrums in the short term,” he said.