Ex-India pellet prices suffered a major setback early this week to touch a five-month low as buyers from China exited the market in the face of weak demand, while sellers pulled back from floating fresh offers, resulting in inactive trade conditions, SteelOrbis learned from trade and industry circles on Friday, August 7. Nevertheless, with the recent increase in iron ore fines prices in China on Thursday, Indian suppliers are hoping for a price rebound for pellets to a more reasonable level for them.
Sources said that ex-India tradable pellet prices have lost $4-5/mt to the range of $110-111/mt CFR - a five-month low. But the sellers' targets have remained at $115/mt CFR, which has resulted in silent trade conditions.
Neither buyers nor sellers have been willing to commit to trades, maintaining divergent outlooks. Major local pellet producers already had low stocks during the rainy monsoon season and have preferred giving priority to domestic sales and have felt no need to compromise at current export prices.
At the same time, weak global iron ore prices and sufficient stocks at ports in China have led to Chinese buyers pulling out of the market, the sources said.
“The sharp fall seen has made current prices unrealistic for both buyers and sellers, from their respective perspectives. Sellers are tight on supplies because of the monsoon rains and have short supplies of fines. Whatever is being produced is finding sufficient takers locally and hence there is no compulsion to adjust prices and sell overseas,” a member of the Pellet Manufacturers' Association of India (PMAI) said.
“Domestic realization is higher than exports by around INR 1,100/mt ($12/mt) on ex-plant basis. Hence, the viability of exports stands almost fully eroded. Buyers and sellers will both remain on the sidelines until such time as there is any kind of price breakthrough in either direction,” he added.
