India’s iron ore pellet export prices have slumped during the past week amid over-production, stock pile-ups and the emerging trend of Chinese steel mills shifting to high grade lumps, resulting in reduced buying interest in pellets, SteelOrbis has learned on Friday, April 3.
Market sources said that Indian iron ore pellet export prices are down to $112-113/mt CFR China, compared to $114-115/mt CFR last week.
Indian iron ore pellet producers, particularly in the eastern state of Odisha, had started the week with an increase of capacity utilizations as the Indian government had exempted the industry from the ongoing national lockdown by categorizing mining and pellet production as ‘essential commodities’.
This, however, had led to a glut in the market, as producers were facing stock pile-ups at their plants from a lack of transportation from production sites as trucks were not permitted to ply and the main port handling iron ore Pradip Port was facing a logjam and was giving priority to inward shipments of oil and petroleum products.
Even though later in the week, several Odisha-based pellet manufacturers were seen to be reducing plant capacity utilizations, there were still too many stocks lying at plant sites and, in the absence of strong Chinese buying, prices were under pressure, traders said.
At the same time, pellet producers in land-locked states like Jindal SAW Limited’s 1.2 million mt pellet plant in the central state of Rajasthan were shut down during the past week, citing force majeure.
Market sources said that an Odisha-based private trading firm concluded a deal for 30,000 mt of high grade pellet with alumina content less than two percent with an Asian buyer at $112/mt CFR, though the firm declined to divulge the identity of the buyer or delivery dates.
Reshmi Group has concluded a deal for a relatively small volume estimated at 20,000 mt for May delivery with a Chinese trading firm at the slightly higher price of $113.50/mt CFR.
“As Chinese steel mills begin to ramp up plant operations, they are preferring high grade iron ore lumps to feed blast furnaces and premiums on such high grade lumps are falling. This, coupled with Indian producers being unable to commit early deliveries and the softening of prices in local markets, has been impacting trading conditions in the market,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
Pellet prices in the local Indian market are also down as most private steel mills which were primary buyers of pellets had drastically cut down steel mill capacity utilizations and, with transportation restrictions, restocking has been at a very low level, further increasing stocks at pellet plant sites. Local pellet prices are down INR 200/mt ($2.64/mt) week on week to INR 6,050/mt ($80.20/mt) ex-works, the sources said.