Indian iron ore pellet export prices have staged a smart recovery over the past week supported by the emergence of strong restocking by Chinese buyers ahead of the long holiday and blast furnaces increasing the proportion of pellets being used as feedstock, SteelOrbis has learned from trade and industry circles.
Ex-India pellet prices have surged to $165-180/mt CFR China, up from trading levels of $140-150/mt CFR late last week on the back of active Chinese buying and the rise in average deal volumes supported by the strong restocking of raw materials ahead of the holiday.
Trading sources in India have also pointed out that a number of Chinese blast furnaces have been increasing the proportion of pellets used to reduce coke utilization rates in view of the rising price of the latter, rather than using iron ore lumps and fines which require higher coke inputs.
The sustainability of this trend in blast furnace operation, if continued after the holiday, could reverse the bearish sentiments seen in the pellet export market over the past month.
“On the one hand, many mills in China are reducing sintering operations. At the same time, with rising prices of coke, operators are aggressively tackling costs and attempting to lower the coke consumption rates of furnaces by increasing pellet usage,” sources at an Odisha-based pellet exporter said.
“While demand for pellets is firming up, reports from our buyers indicate that stocks at Chinese ports will not be more than 4-6 million mt, triggering a rise in restocking activity and enabling Indian exporters to push up prices,” he said.
Sources said that a pellet-producing arm of Essel Mining is heard to have concluded a trade for 35,000 mt at a price of around $170-175/mt CFR China and another smaller tonnage deal of 20,000 mt with a Gulf-based buyer at around $165-170/mt CFR.
The pellet producing plant of Jindal Steel and Power Limited in Odisha has reported a trade for around 40,000 mt at a price of around $165-170/mt CFR China for December delivery.
A trade for 40,000 mt was concluded by an Odisha-based exporter with a Singapore-based trading firm with China to be the final destination at a price of around $175-180/mt CFR for high grade pellet with alumina content less than two percent.