India’s iron ore pellet exports ended their inactivity with a slight increase in trades over the past week, though deals were concluded at a significant discount to offers, SteelOrbis learned from trade and industry circles on Friday, July 29.
Ex-India pellet prices have been reported in the range of $120-130/mt CFR China compared to $128-132/mt CFR, but trades reported during the past week have been lower at $105-115/mt CFR.
According to sources, there was a slight increase in the number of buyers active and submitting bids, following reports steel mills in China are planning to increase production. But even though sentiments improved compared to the past several weeks, buyers are still cautious and have only been willing to conclude smaller tonnage deals at discounts to offers.
Trade circles said that a pellet producing arm of an Odisha-based integrated mill has concluded a deal for 20,000 mt for September shipment at $105/mt CFR net of discount.
Another sale was reported for 30,000 mt by an Odisha-based pellet producer at $115/mt CFR net of discount for higher grade pellet with alumina content of less than two percent.
“Though the inactive market conditions have ended, it is too early to claim a turnaround. We do not think that at current prices sellers have any positive margins after factoring in the 50 percent export tax. So, despite some deals, exports continue to remain economically unviable for producers,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“We hear that mills in China are planning hikes in output, but it is still not clear when. Hence any positive impact on raw material demand, if any, is also not clear. Pellet export realizations need to surge to levels of $140-150/mt CFR for sellers to achieve net positive margins and the market is still a long way off from such a target,” he said.