Indian iron ore pellet prices have surged during the past week on the back of the surge in iron ore prices in China and short supplies arriving at ports, but trading activity among local Indian producers has been limited as the Indian government is not providing any clarity on the proposed ban on iron ore exports from the country, traders and producers said on Friday, December 4.
They said that ex-India pellet prices have surged $9/mt to $147-149/mt CFR China, with at least one trade concluded higher at around $152/mt China.
However, the number of deals has been very limited as local pellet exporters were cautious in concluding any bookings beyond February deliveries, wary of the imposition of a ban on exports and the confusion in the market as to whether such a ban would be effective for already-concluded contracts.
“The outlook for Indian pellet exports is positive on one front. Prices of iron ore fines and concentrates are rising very fast in China. A lot will depend on finished steel prices and producers’ ability to absorb higher input costs. But, on the second front, in India pellet exporters are hamstrung in leveraging higher prices by increasing volume offers, in view of too much uncertainty over an imminent ban of exports,” a member of the Pellet Manufacturers Association of India (PMAI) said.
“The government has just said that it is in favour of imposing such a ban. But it should come out with a specific announcement one way or the other to dispel market uncertainties,” he added.
Market sources said that an affiliate of Godavari Ispat and Power Limited (GIPL) has reportedly concluded a trade for 40,000 mt of high grade pellet with alumina content less than two percent at a price of around $149/mt CFR China for February delivery.
An associate company of Essel Mining concluded a high volume trade for 55,000 mt of pellet with alumina content less than two percent for February delivery at around $152/mt CFR, the sources said.