Ex-India iron ore pellet export market suffered setback during the past week with prices being pulled down by sharp fall in price of iron ore lumps and fines in China and aggravated concerns over impact of cut in steel output and wide variations between bids and offer levels led to almost negligible trades reported in the market, SteelOrbis learned from trade and industry circles on Friday, July 30.
Ex-India pellet price was down $10-15/mt to levels of $240-255/mt CFR China, but hardly any deals were heard in the market as buyers were seeking deals at bids of a low of $210-220/mt CFR, while local sellers were unwilling to accept such low valuations in view of sustained rise in price of iron ore fines in the local market coupled with tight availability from mines in Odisha.
“Iron ore price in China has fallen below the $200/mt mark. Raw material buyers are unwilling to pay a high premium for direct charge like pellets. But local pellet exporters are in no position to bring down offers below the $240/mt as it would entail almost negative margins factoring in current high price of fines feedstock available for merchant miners,” a member of Pellet Manufacturers’ Association of India (PMAI) said.
“Our assessment is that demand for low grade fines at much lower price is rising among Chinese steel mills. With mills steadily reducing output in line with government directive, mills are in no compulsion to spend on higher grade direct charge like concentrates and pellets to increase output,” he added.
At least two pellet producers said that as long as sintering restrictions are being implemented, Chinese steel mills’ shift from fines to higher grade pellets for direct charge is rising. But there has been a reversal in raw material demand trend, now that sintering restrictions if being replaced by overall checks on crude steel output and mills are shifting back lower price low grade fines.
According to two market sources, bids for ex-India pellets faced strong downside risks of below $200/mt mark but at the same time observed that exporters will prefer to halt concluding deals as local price of fines is still very strong on tight supplies.
The only minor trade heard in the market is for a relatively small tonnage deal of around 20,000 mt concluded by an Odisha based miner cum pellet producer at price of around $220-230/mt CFR.