Bearish conditions in the India pellet export market have been aggravated further with prices suffering a major setback during the past week amid weak demand from China and even the mild recovery towards the close of the week has failed to improve the outlook, SteelOrbis learned from trade and industry circles on Friday, November 12.
Ex-India pellet prices have slumped to $130-140/mt CFR China compared to $145-153/mt CFR a week ago amid reports that at least two supply contracts concluded earlier in the month had been cancelled.
According to the sources, the margins of steel mills in China are narrowing and impinging on their ability to source higher-priced pellets and concentrates and so they are having to depend on higher volumes of cheaper fines, depressing the demand outlook for Indian pellets.
“Weak finished steel prices have made pellets and concentrates much more price-sensitive. Also, with several blast furnaces in China going in for maintenance shutdowns, the raw material demand outlook is pessimistic and prices still have significant downside risks,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“Spreads between local prices of fines and pellets have narrowed, reducing margins of pellet plants. While buyers are already looking at $100/mt CFR as a target price, local sellers are reducing volume offerings overseas,” he said.
Sources said that a pellet-producing arm of Essel Mining reported a trade for 30,000 mt for January shipment at $135/mt CFR with a China-based buyer. It also concluded a deal for 20,000 mt with a Middle East buyer at $140-145/mt CFR.