Indian iron ore pellet export prices have been maintained during the past week even as trading activity was low owing to the Labor Day holiday in China. At the same time, fresh supply-side pressures are showing signs of getting stronger as domestic steel mills refuse bookings, SteelOrbis has learned on Friday, May 8.
Market sources said that iron pellet export prices have been kept stable in range of $98-100/mt CFR China despite very few trades being concluded over the past week due to the holiday in China and also because buyers are expecting a softening of prices as competition has mounted among suppliers.
The sources said that Godvari Power and Ispat Limited which had recently resumed pellet production are reported to be steadily increasing plant capacity utilizations and, along with Jindal SAW, have been offering large-volume sales in the local market in the absence of export bookings, but local steel mills have been declining any raw material restocking as they have not planned any immediate increases in steel mill capacity utilizations.
In fact, with local sales unlikely to revive, exportable volumes are increasing, particularly from pellet manufacturers around Raipur in central India and this is expected to put pressures on prices once Chinese buyers become active next week, the sources said.
Since the Labor Day holiday ended May 5 in China, only local pellet producer Brahmani River Pellets Limited (BRPL) has reportedly concluded a booking for an estimated volume of 35,000 mt for the end of June at $100.5/mt CFR China for high grade pellet with alumina content less than two percent.
“While Chinese buying is expected to gain momentum once traders return to the market, the upside potential of ex-India pellet prices will be strongly limited by too many supplies in the absence of local buying volumes. Hence, prices are unlikely to breach the $100/mt mark and buyers are also unlikely to find prices higher than that level acceptable,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.