Indian iron ore pellet offers have maintained their higher levels during the past week on strong demand and expectations of firm buying in the future as more Chinese steel mills shift from iron ore fines to pellets, traders said on Friday, October 18.
Market sources said that Indian offers have remained at $108-110/mt CFR China during the past week. However, according to sources, iron ore pellets with alumina content of two percent or less has been traded at the higher end of the range and at least two deals for early November delivery have been concluded at a premium of 10 percent.
The sources citing market reports said that Jindal Steel and Power Limited (JSPL) has concluded a deal for an early November delivery at $111-112/mt CFR China. Reshmi Group is reported to have concluded two contracts at around $110/mt CFR for early November delivery, the sources added.
“While sintering restrictions on Chinese steel mills are definitely pushing demand for Indian iron ore pellets, in the long term demand for Indian pellets is expected to be sustained and even rise as environmental norms on Chinese steel mills can only become stricter, leading to more steel mills shifting from iron ore fines to direct charging of high grade iron ore pellets,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“Estimates of the PMAI indicate that Chinese steel mills would require an additional 50 million mt of iron ore pellets from the current levels even if 50 percent of Chinese domestic steelmaking plants shift to high grade iron ore pellets once stricter environmental norms come into force. This will not only support Indian pellet prices, but will also increase total Indian pellet plant capacity utilization currently in the range of 65-70 percent,” the PMAI member added.