Ex-India pellet prices have overcome some early-week nervousness and marginal losses to bounce back, breaching the $200/mt CFR mark amid renewed restocking by mills in China ahead of the Lunar New Year holiday, the slowdown in arrivals at ports, and mills attempting to improve productivity after output cuts, SteelOrbis learned from trade and industry circles on Friday, January 14.
Trades early in the week were heard at around $180-183/mt CFR China compared to $188-190/mt CFR a week ago, but the emergence of high-volume bookings pushed up prices by $10-12/mt on week on week to levels of $198-202/mt CFR.
“Buying is strong ahead of the Chinese New Year next month. Low deliveries at ports in China are also pushing up ex-India prices. This at a time, when mills in China are trying to improve productivity of blast furnaces through higher use of concentrates and pellets,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“However, there is still caution over too much optimism. Prices cannot rise too fast as mills will need to keep a close watch on costs as conversion margins of steel producers are still under stress. Too fast a rise in raw material prices can trigger a correction. Hence, while the margins of local pellet sellers are very positive, pricing will need to be conservative going forward,” he said.
Trade circles said that during the past week the average deal tonnage increased to levels of 50,000-55,000 mt, up from the average deal volumes of 30,000-40,000 mt in the earlier week, indicating strong buying interest. The industry estimates the total volume of deals concluded over the past week to be around 400,000 mt.
Sources said that an Odisha-based aggregating trader concluded a trade for 50,000 mt of high grade pellet for March shipment at $203/mt CFR.
The pellet production arm of Jindal Steel and Power Limited is heard to have done a deal for 55,000 mt of high grade pellet with alumina content less than three percent at a price of around $200/mt CFR.