Ex-India iron ore pellet prices have skyrocketed during the past week, reacting to the surge in spot and futures prices of raw materials in China and, while trading activity in the local market has indicated a sharp upturn, exporters are more cautious as regards concluding bookings for deliveries for April amid a lack of any government clarification on its possible decision to ban iron ore exports, SteelOrbis has learned on Friday, December 11.
Market sources and traders said that iron ore pellet prices from India have surged $10-12/mt to $157-161/mt CFR China, with both the number of trades and volume bookings concluded improving from the previous week.
“The iron ore market is on fire. Prices are hitting new peaks in China and the shortage is getting more acute in the local market and prices are being fuelled by both demand and supply sides. Arrivals at Chinese ports are falling according to the reports we receive,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“Buyers tell us that raw material stocks at steel mills in China are low. But restocking at current high prices is cautious too. No one is certain whether this is a current peak or whether the market is in for a correction. The present market trend is confusing as usually the winter months in China see a fall in raw material restocking,” he added.
At least two producers from India have said that downside risks are limited as pellet producers are facing shortages in sourcing iron ore fines from merchant miners, while several integrated steel mills like Rashtriya Ispat Nigam Limited (RINL) are seeking pellet suppliers in the face of the shortage of high grade lumps from local mines.
Hence, in view of rising local demand, export allocations of local pellet producers will also tighten over the coming months, supporting export prices, they said.
Sources said that Brahmani River Pellet Limited (BRPL) has reported a deal for about 50,000 mt for end-of-March delivery at a price of around $159-161/mt CFR China for high grade pellets of alumina content less than three percent.
An Essel Mining affiliate pellet producer reportedly concluded a trade for 40,000 mt for March delivery at a price of around $160/mt CFR China and also for another tonnage of 30,000 mt with a Singapore-based trading firm at a price of around $158/mt CFR, the sources said.
Jindal Steel and Power Limited has reportedly concluded a deal for around 40,000 mt for end-of-February delivery at a price of around $161-163/mt CFR China, the sources added.