Ex-India iron ore pellet prices have softened slightly during the past week in reaction to production cuts by Chinese steel mills, but the outlook has remained positive amid reports that curbs on production of some steel mills in some provinces in China may not be as stringent as feared, SteelOrbis has learned from trade and industry circles on Friday, March 19.
The sources said that, as monitoring of emissions of Chinese steel mills gained momentum early in the week, it depressed raw material prices slightly with buyers expecting a demand slowdown if checks on emissions led to further curbs on blast furnace production levels.
However, the downside risks in pellet prices have been limited by expectations that either restrictions will be eased in the near term or will not be as stringent as they were earlier, providing some support for prices, trade circles said.
Indian pellet export prices have been quoted in the range of $210-215/mt CFR China, slightly lower than $215-220/mt CFR a week ago, even as reports indicated limited trades being concluded over the past week, sources said.
“Developments in China are impacting sentiments here. But this is a short-term impact. Drastic production cuts by Chinese steel mills can be ruled out considering critical domestic demand for steel. On the other hand, higher sintering restrictions can only lead to higher demand for pellets and concentrates, which will support Indian exports,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“At the local level, supplies of iron ore fines available to pellet producers are still very tight. This will limit pellet prices as regards falling below the $200/mt mark on CFR basis. It needs to be underlined that a large part of the rise in pellet prices above the $200/mt mark is owing to the increase in freight rates, and realizations for sellers have not seen commensurate improvements,” he added.
Sources said that Brahmani River Pellets Limited (BRPL) has reportedly concluded a trade of high grade pellet of 35,000 mt with alumina content of less than three percent at a price of around $212-215/mt CFR.
A pellet producing firm of Essel Mining has reported a trade for 30,000 mt for end-of-May delivery at a price of around $210-212/mt CFR, the sources added.