Indian iron ore pellet export offers have continued to consolidate at higher levels amid strong Chinese demand with at least one deal for early delivery concluded at a premium, SteelOrbis learned on Friday, January 10.
While export offers have ranged at around $117-118/mt CFR China for ore pellets with alumina content of two percent and less, at least one deal has been reported in the market concluded by Reshmi Group at the higher level of $120/mt CFR China for a cargo estimated at 30,000 mt for early February delivery. Last week, prices were mostly at $117/mt CFR.
The sources said that Indian iron ore pellet producers have been getting realizations of around $120/mt from local sales as domestic steel mills have been buying aggressively, anticipating a shortage of high grade lumps, and pellet producers had limited stock available and hence were pushing for higher prices for early February delivery compared to March deliveries.
Brahmani River Pellets Limited (BRPL) has concluded a deal for a cargo of 25,000 mt at $117/mt CFR China for early March delivery, while its second trade of 30,000 mt was slightly higher at $117.5/mt CFR China for March delivery, the sources said.
State-run pellet producer, KIOCL (formerly Kudremukh Iron Ore Company Limited) has reportedly concluded a deal at $118.5/mt CFR for delivery to the Chinese port of Shandong in early March, though the volume of the trade could not be ascertained in the market.
“Domestic pellet producers will try to push up offers to levels of $120/mt, at par with their realizations from local sales. There are very limited volumes available in the current month in view of the strong demand from domestic steel mills. Overseas buyers are willing to pay a premium for February delivery and higher offers will be become the new benchmark from February once higher exportable volumes become available,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“Indian iron ore imports slumped 90 percent during April-November 2019 as domestic steel mills increased sourcing from the local market. Tight supplies in the local market will enable pellet producers to continue to push up export offers,” he added.