Indian iron ore pellet export offers have sought lower levels during the past week as the trend among Chinese steel mills to use higher volumes of high grade lumps has gained momentum, traders said on Friday, September 20.
Reports that global resource majors like Vale will increase shipment volumes of pellets from October have also put pressure on Indian offers, traders said.
Indian pellet offers range at $104-106/mt CFR China, but these are largely of grade with alumina content of three percent and higher and no bids have been received from buyers at this level. Most of the transactions concluded during the week have been at a slight premium for grades of alumina content below three percent, market sources said.
The source said that Jindal Steel and Power Limited (JSPL) has concluded an export contract at $110/mt CFR China for end-October delivery. Brahmani River Pellet Limited (BRPL) is reported to have concluded a transaction at $106/mt CFR for iron ore pellets with alumina content of three percent and above.
“There are several pressures building up on Indian iron ore pellet export offers. The first being preference for Indian pellets is waning as Chinese mills are shifting to high grade lumps as availability is improving,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“Indian pellet producers are watching closely reports received in India that Chinese steel mills having annual supply contracts with global resource majors are moving to re-negotiate pricing of yearly contracts in view of falling raw material prices. There are also talks of annual contracts being replaced by six-monthly or even three-monthly supply contracts at lower prices. If these talks fructify, there will be renewed pressures on Indian pellet offers in the spot market,” the PMAI member added.