Indian iron ore pellet export prices have rebounded sharply during the past week riding on a combination of the big rise in prices of iron ore fines in China, the shortage of availability of high grade fines in the local market, and exporters attempting to compensate for the impact of the Indian currency gaining strength against the US dollar.
Market sources said that most large Indian producers have increased pellet export prices by a range of $5-10/mt to $118-123/mt CFR China, and, although trades have remained muted, exporters are optimistic that market activity will pick up with peak steel consumption in October prompting aggressive resumption of raw material restocking.
At least two eastern India-based pellet producers said that availability of high grade iron ore fines (Fe content 62% and above) is extremely tight as a result of strong procurement by local steel mills even though several miners said that stockpiles of lower grade fines (Fe content 58-62%) had increased to levels of 162 million mt, but neither steel mills nor pellet producers are interested in such material.
Local pellet exporters have also been forced to increase prices to offset the impact of the Indian rupee which has been rapidly gaining against the US dollar, appreciating from levels below INR 74.50 to the dollar to levels of around INR 73 to the dollar, and it is forecast to rise further to INR 72 to the dollar, putting pressures on rupee-equivalent margin realizations from export shipments, traders said.
Sources said that Jindal Steel and Power Limited (JSPL) has reportedly concluded a deal for 45,000 mt of pellet with a China-based trading firm at $120-123/mt CFR. Brahmani River Pellets Limited (BRPL) is reported to have concluded a deal with a Chinese steel mill through a trading firm for an estimated tonnage of 40,000 mt at $120/mt CFR. An affiliate of Essel Mining, according to market sources, has concluded a trade for 55,000 mt of high grade pellet with alumina content of less than two percent at $123/mt CFR.
“Chinese steel mills are at present cautious as prices of high grade fines and pellets are rising sharply. However, the outlook is very strong among suppliers as raw material prices are forecast to keep consolidating at higher levels during the peak finished steel demand season from the current month on,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.