The Indian pellet export market was hit by high volatility over the past week with prices recording sharp gains on reports of low stocks at Chinese ports and fresh re-stocking, but gains were soon wiped off and prices suffered setbacks as buyers quickly deserted, reacting to rising uncertainties of impact of collapse of Evergrande Group on finished steel prices, SteelOrbis learned from trade and industry circles on Friday.
Ex-India pellet prices recorded sharp gains early in the week to the range of $170-180/mt CFR China, up from $150-160/mt CFR a week ago. But the gains were soon wiped off and prices slumped to $140-150/mt CFR, but buying did not sustain even at lower levels.
According to market participants, raw material buyers decided to defer any fresh contracts as they were unsure of how rebar prices in China would react to the possible collapse of Evergrande. At the same time, Chinese steel mills, under pressure of production cuts, were increasingly using cheaper iron ore fines to meet lower feedstock demand, supporting prices, while falling demand for higher priced concentrates and pellets was leading to incremental pressures.
Sources said that a pellet manufacturing affiliate of Essel Mining reported a trade for early in the week for 35,000 mt at price of $170-175/mt CFR for November shipment. But the same exporter reportedly pulled out an export offer for 25,000 mt owing to ‘inadequate bids’, the sources said.
“Iron ore prices in China recovered from recent lows simply because mills are still buying, but they have sharply reduced putting in money in higher priced concentrates, pellets as blast furnaces are under no pressure to improve output. Sporadic buying will not support pellet prices to consolidate,” a member of Pellet Manufacturers’ Association of India (PMAI) said.
“Indian pellet producers too have built up high stocks which is not being absorbed in the local market, putting supply side pressures on prices,” he added.