Ex-India iron ore pellet prices suffered initial setbacks early last week amid reports of higher-than-expected production cuts imposed on steel mills in Tangshan, China, but have rebounded since. Nevertheless, most of the increase in prices on CFR basis has been attributed to higher freight charges, SteelOrbis has learned from trade and industry circles
Mills in Tangshan will have to reduce production by at least 30 percent up to the end of the year and this put pressure on Indian pellet prices which fell to levels of $190-200/mt CFR amid scarce trading early in the past week.
However, ex-India pellet prices have since rebounded sharply amid improved sentiment and expectations that restrictions will increase demand for direct charge blast furnace raw materials like pellets, with Indian exporters improving sales prices to $215-220/mt CFR, compared to average trading levels of $210-215/mt CFR a week ago.
The varied trend during the week resulted in a widening of the trading price range at $190-220/mt CFR, though expectations of a rise in demand from sintering restrictions have not been reflected in a rise in trading volumes, at least during the past week, the sources said.
At least two Odisha-based pellet producers have said that even trades concluded at higher prices during the week have not led to higher sales realizations for sellers, as much of the price increase was on account of the hike in freight rates by shipping lines, which have increased charges by an average of around 2-3 percent per metric ton for April-May loading.
Market sources said that an Essel Mining affiliated pellet producer reportedly concluded a booking of a relatively small tonnage of around 20,000 mt at a low price of around $195-200/mt CFR early in the week.
The sources said that Brahmani River Pellet Limited (BRPL) in a contract concluded a sale of a higher tonnage of around 35,000 mt of high grade pellet with alumina content less than three percent at a price of around $215-220/mt CFR.
An Odisha-based pellet producer cum steel trading firm has reported a trade with a Singapore-based buyer for around 30,000 mt at a price of around $215/mt CFR for May delivery the sources said.
“Fundamentally, sintering restrictions on Chinese steel mills should translate to a higher dependence of pellets as direct charge material for blast furnaces. But we are not seeing this as yet in terms of a rise in volume bookings by Chinese buyers. The price increase that we are seeing is basically on low trading activity and because of a rise in freight charges,” a member of Pellet Manufacturers’ Association of India (PMAI) said.
“We are hearing that some Chinese mills have been directed to cut production by as much as 50 percent. In such a case, there will be an overall demand depression for raw material, and pressures on Indian pellets. Most exporters are waiting and watching to see a new demand pattern unfold over the next one month,” he added.