Ex-India iron ore pellet prices have increased during the past week to consolidate at higher levels amid a combination of strong restocking by Chinese traders and actual users, which provides support for Indian sellers to pass on sharp rises in iron ore fines prices, SteelOrbis learned from trade and industry circles on Friday, June 18.
Sources said that buyers’ initial hesitancy seen in the previous week has given way to renewed activity from Chinese buyers’ restocking and rising local price of fines despite continuing restrictions on sintering.
Rising prices of iron ore fines, reportedly by an average of 30-40 percent in Odisha since last month have prompted Indian pellet producers to push up export prices to $240-250/mt CFR, with some confirmed reports suggesting at least two deals at the highest price during the week of $260-270/mt CFR for high grade pellets with alumina content less than 2-3 percent. A week before the general price level was at $230-240/mt CFR and up to $250/mt CFR for higher grade material.
“Our assessment is that the fundamentals of steel and raw material prices will consolidate in China during the second quarter of the current fiscal year and the recovery of the futures market is a signal towards that. This will enable local pellet producers to achieve the short-term price target of $300/mt CFR,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“The market is rallying but per metric ton realizations of pellet producers will continue to face headwinds from rising prices of fines. In Odisha, there are almost no fines on offer for next month delivery from merchant miners. Even with long lead times, pellet producers are not able to conclude supply contracts for large volumes. This will limit exporters from increasing pellet sales volumes. Fines supplies will get tighter over the next two to three months owing to monsoon rains,” he added.
Sources said Godavari Ispat and Power Limited’s pellet producing arm reported a trade for around 30,000-40,000 mt at $240-245/mt CFR. A pellet producing affiliate of Essel Mining reported a trade of 50,000 mt at $245-250/mt CFR, the sources said.