Indian iron ore pellet export prices have continued to skyrocket for the second consecutive week supported by the firming up of finished steel and iron ore fines prices in China, strong futures contract prices and expectations that the tightness of raw material supplies will be sustained, traders said on Friday, December 18.
Market sources and producers said that ex-India iron ore pellet prices have risen by $8-10/mt to the range of $165-171/mt CFR China, but local pellet producers are cautious about concluding contracts for excessively large volumes, facing stiff challenges in sourcing fines from domestic merchant miners in the wake of increasing shortages in the local market.
“Pellet prices are consolidating at higher levels both in export and local markets. Tight global supplies are not expected to ease despite some Brazilian producers coming back into production. Finished steel prices are strong in China and this will support ex-India pellet prices,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“But local pellet producers are hamstrung in fully leveraging the bullish international markets. There is no clarity from the government yet on whether a ban on iron ore exports will come or not over the next few months. Even otherwise, there is a raw material shortage faced by domestic steel mills and pellet plants are facing challenges in procuring fines for conversion and forced to limit the volumes booked for overseas shipments,” he said.
Sources said that Brahmani River Pellets Limited (BRPL) reportedly concluded a contract for 30,000 mt of pellets for end-of-March delivery at a price of around $170-175/mt CFR China for high grade pellets with alumina content of less than two percent.
An Essel Mining affiliate pellet producer has reported a trade for around 35,000 mt for early April delivery at around $170/mt CFR China, the sources added.
Jindal Steel and Power Limited’s pellet producing facility, sources said, concluded a deal for around 30,000 mt at a price of around $170/mt CFR China for early April delivery.