Reversing a short-lived downtrend, ex-India pellet prices have edged up over the past week as Chinese buyers increased their activity in the local market and amid anticipation that Chinese steel mills will resume restocking for the winter months, traders and market participants have said.
They said that, despite the slight weakening of prices of concentrates, pellet prices have been showing signs of recovery in reaction to short supplies in the international markets and higher prices of fines in the local Indian market with the benchmark price-setter, state-run NMDC Limited, commencing the year announcing a price hike.
Ex-India pellet prices have increased by $7/mt to $180-185/mt CFR China and, though the number of buyers submitting bids has been higher compared to the year-end, local pellet producers limited their concluded trades largely owing to challenges in sourcing fines from merchant miners and the speculative prices being charged by the latter.
“The slight dip in the market in the short term will not change the fundamental strong outlook for raw materials, with demand in China remaining strong and supplies from key resource majors tight. In the local market, strong global fundamentals will be supported by high prices and low supplies of fines available for pellet conversion,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“Directly chargeable raw materials still remain the first choice of most Chinese steel mills. For Indian pellet exporters, committing volumes against bids is the biggest challenge as merchant miners cannot increase production and merchant sale of fines at least over the next few quarters,” he added.
Sources said that Brahmani River Pellets Limited (BRPL) has concluded a trade of an estimated tonnage of 40,000 mt with a Singapore-based trading firm at a price of around $182-185/mt CFR for high grade pellet with alumina content of less than two percent for April delivery.
The pellet producing plant of Jindal Steel and Power Limited has reportedly concluded a trade for around 30,000 mt at around $180-182/mt CFR China, the sources said.