Indian iron ore pellet export market has cooled down by the end of the past week after prices reached a historical high level, as buyers slowed down their bookings expecting a downward price correction, SteelOrbis learned from industry and trade sources.
While declines in ex-India pellet prices are modest compared to the surge seen earlier, supply side logistical challenges emerging in key producing regions risked some more downside potential, but the outlook for the medium term is still positive, the sources said.
Ex-India pellet prices have declined by about $10/mt over the past week to $250-255/mt CFR China, which at least two local producers attributed to losses in the Chinese futures market rather than negatives on demand-supply fundamentals in the medium term and cause for continued optimistic outlook in the market.
However, a section of the market including at least one producer maintained a more bearish position on the supply side predicting rising logistic challenges which could force exporters to be cautious in committing bookings even as Chinese buying rebounds.
It is pointed out that at least two ports in southern India have declared force majeure in view of the pandemic. This together with truckers and port stevedores largely preferring to stay away from work in the worst affected regions in southern coastal states would act as deterrents for producers to increase shipments, at least in the coming weeks.
Though it could not be independently confirmed, at least two sources in trade circles said that two cargoes scheduled for loading against bookings late last month have been delayed owing to port restrictions and delivery stipulations in contracts with buyers in China have been re-negotiated avoiding penalty risks.
Expectations of a correction among buyers and logistical challenges rising in the local market resulted in a sharp drop in the number of trades.
Sources said that a pellet producing arm of Essel Mining reported a sales of relatively small tonnage of around 25,000 mt at price of around $245-250/mt CFR China.
Godavari Ispat and Power Limited (GIPL) has reported a similar small volume deal for 20,000 mt at $250/mt CFR, the sources added.