India’s pellet exports have lapsed back into inactivity and, even though sellers dropped prices, a further fall in raw material prices and finished steel margins in China have kept all buyers away from pellet purchases.
Sources said that ex-India pellet prices have been cut to $100-105/mt CFR China, compared to some deals at $105-115/mt CFR a week ago and offers at $120-130/mt CFR, but have still failed to attract any buyers.
The sources said that current ex-India pellet prices are almost on a par with the price of middle grade iron ore fines in China on CFR basis but even then the lack of buying for higher grade raw material like pellets indicates a bearish outlook. It also indicated that, even though steel mills in China are increasing output, with margins of finished steel being thin, raw material buyers have continued to remain very price-sensitive.
“The ex-India offers around $100/mt CFR are largely notional because neither are there buyers at this level nor does the price offer any positive margin to the seller,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“Ex-India business can only revive if steel mills in China are able to sustain higher output levels and, as port stocks are down, if restocking resumes more aggressively. But pellet prices will need to recover at least 20-30 percent for exports to become viable,” he said.