Ignoring weak finished steel and iron ore fines prices in China, Indian iron ore pellet exporters have increased export prices banking on firm demand and lower exportable volumes in the local market to support higher pellet prices, SteelOrbis learned on Friday, September 11.
According to trades and market sources, local large pellet exporters from India have increased prices by $10/mt over the past week to around $128-133/mt CFR China amid moderate trading activity.
Iron ore traders and pellet producers said that a discernible trend emerged over the past few weeks whereby Chinese buying of low grade iron ore fines surged, with several Chinese mills resorting to blending low grade Indian fines with high and medium grade Australian and Brazilian fines in view of tight supplies of the latter.
A combination of factors prompted local pellet producers to increase prices, including the need to maintain a higher differential between ex-India low grade fines and pellets and the expected tightening of outbound shipments in view of the logjam of vessels waiting at the key eastern Indian port of Paradip in Odisha. Almost 50 percent of total iron ore fines and pellets exported from the country are through Paradip and Gopalpur ports in Odisha.
It has been pointed out that higher pellet prices will be sustained in the medium term because exportable volumes of lower grade fines to China are expected to dry up in view of the September 30 deadline set by the government for erstwhile iron ore mining lease holders to liquidate their existing stocks before new mining lease holders commence mining operations at newly auctioned mines. This is expected to put buyers’ focus back on sourcing higher volumes of ex-India pellets, traders and pellet producers said.
Sources said that an Essel group company concluded a trade for an estimated volume of 45,000 mt of high grade pellet with alumina content of less than two percent for November delivery at the higher end of the range of around $130-133/mt CFR China.
Brahmani River Pellets Limited has reportedly concluded a deal with a Shanghai-based trading firm for an estimated volume of 50,000 mt at a price of around $130/mt CFR, the sources said.
Another Odisha-based pellet producer cum integrated steel operator has concluded an export trade for 40,000 mt with Chinese buyers for a price reported in the range of $129-133/mt CFR, the sources added.
“The busy season for steel consumption in China has started. The slight weakening of finished steel prices and raw materials is expected to be reversed soon. At the same time, ex-India shipments of pellets will tighten further as most pellet producers are facing low supplies of iron ore fines from merchant miners, particularly in Odisha, as in several mining assets there is a transition of ownership between erstwhile lease holders and new lease holders following the new auction,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.