Indian iron ore pellet exporters marginally increased prices, but trades fell slightly in reaction of Chinese buyers deterred by high prices and kept both volumes and number of deals limited, SteelOrbis learned on Friday.
Merchant sales prices of higher grade iron ore fines in India, the primary raw material source for pellet producers, increased and higher price was factored in marginal increases in the export prices.
However, major Chinese buyers were cautious in aggressively committing large volume transactions of pellets, because even though Chinese steel mills were ramping up utilization rates, margin realizations from finished steel remains under pressure.
Price resistance to Indian export price was also attributed by market intermediaries to continued higher volume arrivals at Chinese ports of ex-Ukraine iron ore pellets.
Market sources said that ex-Indian pellet export prices averaged $108-110/mt CFR China, and most of the limited deals were concluded at lower end of the range compared to deals at $106-108/mt CFR in earlier week.
Godavari Ispat and Power Limited (GIPL) a steel producer with captive pellet manufacturing capacities reportedly concluded a deal with Chinese trading firm for estimated volume of 25,000-30,000 mt of high grade pellet with alumina content less than 3 percent at $108-109/mt CFR China.
An Odisha based large pellet producer, which declined to be identified as exporting to China, according to sources concluded a 35,000 mt September delivery contract with Chinese buyer for high grade low alumina content of less than 3 percent at $109/mt CFR.
“Iron ore lumps and fines prices in the local market is on a rebound as domestic steel mills have begun to increase production levels. Merchant buyers like pellet producers are therefore having to pay a higher price for their feedstock and forced to pass on higher costs in their export price,” a member of Pellet Manufacturers’ Association of India (PMAI) said.
“Buyers are resisting price increases by lowering trades and volumes bookings. But it is to be seen how far this trend can move forward as most Chinese mills’ demand for raw material will increase. But at the same time, global resource majors like Vale are bringing back key mines back into operations. These dynamics will play out on pellet prices over the next one month and Indian producers are awaiting firmer signals in their attempt to push up price further,” he added.