Ex-India iron ore pellet prices have continued to increase rapidly amid a combination of a rush by Chinese customers to buy after the holiday, lower arrival of iron ore fines cargoes from Australia to China, and Indian sellers’ pricing being affected by rising logistical and manpower costs, SteelOrbis learned from trade and industry circles on Friday, May 7.
Ex-India pellet prices have gained $20/mt on average over the past week to $260-265/mt CFR China, compared to the workable price range of $235-250/mt CFR a week ago.
Sources said that trades with Chinese buyers have increased both in terms of the number of deals as well as average tonnages. The market has been rife with talk that iron ore fines arrivals in China from Australia may decline and that emissions restrictions on blast furnaces in China are expected to become the norm in the long term, and that Chinese steel mills have little option but to shift more rapidly to pellets even at higher prices.
At least two officials at large pellet producing companies said that ex-India pellets prices still have headroom to rise further by at least $10-15/mt over the coming weeks with a major production region like Odisha going into complete lockdown, and that sellers would price in higher logistic and manpower costs in their offers.
“If the pandemic does not show signs of abating and the Odisha lockdown continues for more than a week, pellet production costs will see a sharp increase. Transportation costs of inward movement of raw material like fines and outward movement of pellets from plant to port will spike and producers will have no option but to pass on the higher costs to buyers,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“The historically high prices might impact local sales. But this will be offset by strong finished steel prices and demand for concentrate and pellets in China, which is expected to be sustained in the medium and long term,” he added.
Sources said that it was heard that Brahmani River Pellets Limited has concluded a trade of 45,000 mt at around $265-269/mt CFR for high grade material with alumina content less than three percent.
A pellet producing arm of Godavari Ispat and Power Limited (GIPL) has reportedly concluded a deal for 30,000 mt at $260/mt CFR.
It has been learned that a Singapore-based natural resources trading firm acting on behalf of Chinese buyers concluded a trade with the pellet producing arm of Essel Mining for an estimated tonnage of 30,000 mt at a price of $260-265/mt CFR.