Indian iron ore pellet export prices have surged during the past week reacting to sharp increases in iron ore and concentrate prices in China and reports of a possible ban on exports from India, sources told SteelOrbis on Friday, November 20.
Traders and market sources said that ex-Indian pellet prices have spiked by around $5/mt to $138-140/mt CFR China and, though buying interest has been strong, trades have been limited as pellet producers are facing severe shortages of sourcing fines from merchant miners and are uncertain of concluding transactions for beyond February deliveries in view of talk of a ban on exports and are also uncertain of continued availability of fines for conversion and export.
They said that, with India’s minister of steel stating that “a ban on exports of iron ore is a good suggestion”, local pellet producers are uncertain whether they will be able to source fines from merchant miners for conversion once existing stocks are exhausted after February.
Several local steel mills have explained to the government that their existing iron ore stocks had fallen below the equivalent for 15 days of consumption and that prices have surged while availability has also tightened over the past one month.
Citing reports received in India, market participants said that Chinese buying interest has strengthened further during the past week in response to lower arrivals and a fall in port stocks and, while this pushed up pellet prices, Indian pellet producers have limited the number of trades they can conclude for deliveries beyond February.
Market sources said that a group company of Essel Mining has concluded a large volume trade of around 45,000 mt for February delivery at $140/mt CFR China for high grade pellet of alumina content less than two percent, with sources adding that one of the group affiliates having its own iron ore mine enabled the pellet producer to conclude the large-volume deal.
Brahmani River Pellets Limited (BRPL) has reported a deal for around 30,000 mt at a price reported to range around $138/mt CFR China for February delivery, the sources said.
“Downside risks to prices are not a concern. Chinese demand is expected to remain strong with finished and semis prices strengthening across markets. Local pellet producers are more concerned over uncertainties on the supply side amid all the talk of an imminent ban on iron ore exports, as local steel producers are stepping up on lobbying for such an imposition,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.