High volatility in iron ore fines price in China with a downside bias and the expected shift from pellets to fines by blast furnaces have kept Indian pellet export activity subdued during the past week, with buyers largely staying away as new pressures on pellet prices are seen to be emerging.
Leading exporters and traders have said that, while ex-India pellet export offers were maintained at $126-128/mt CFR, even limited small-volume deals were concluded marginally lower by $1-2/mt on CFR basis.
With iron ore fines price showing large volatility over the past week with a negative bias and sintering restrictions on Chinese blast furnaces ending soon, a shift from pellets to fines is expected to gain momentum in the medium term, which would aggravate the negative outlook for Indian pellet exports.
Sources in trade circles said that Jindal Steel and Power Limited (JSPL) has concluded a 15,000 mt trade with a China-based trading firm at a price of around $124-126/mt CFR for December delivery.
Godavari Ispat and Power Limited (GIPL) is reported to have concluded a deal for an estimated volume of 20,000 mt with a Singapore-based trading firm at a price of around $125/mt CFR, the sources said.
“The outlook is becoming more negative from both the demand and supply sides. Chinese buyers are keeping a close watch on local imported fines prices, which are on a downtrend and customers are showing signs of shifting to cheaper fines compared to higher-priced imported pellet,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“On the supply side, local pellet producers are facing rising prices of merchant sales of fines from local miners. Spreads between local price of fines and realizations from pellet overseas sales is getting squeezed. Sellers are setting valuation targets of $130-135/mt on CFR basis, but buyers will not find this acceptable if more Chinese steel mills shift towards fines as feedstock,” he added.