Weak export activity for Indian iron ore pellets, offers stable amid strong local prices

Friday, 21 February 2020 14:40:38 (GMT+3)   |   Kolkata
       

India iron ore pellet exports have come to a standstill with no deals reported in the market during the past week. Exporters have maintained their offers unchanged backed by strong demand among local steel mills, but the outlook in the international market is not very positive, SteelOrbis has learned on Friday, February 21.

Traders said that buyers from China have been almost completely absent from the market and have not responded to offers submitted during the past week as the steel mills in China have yet to ascertain their production levels amid continued uncertainties over steel demand as the spread of the coronavirus is yet to be contained.

The traders said that disruptions in shipping lines and uncertainties over the timelines of ships reaching destination ports have made delivery commitments a very big challenge and neither exporters or importers have been willing to risk concluding contracts.

However, despite the lack of a response from buyers, most local iron ore pellet exporters have maintained their offers in the range of $127-128/mt CFR China or just slightly lower, and are unwilling to adjust prices right now as there is strong demand for pellets from local Indian steel mills, the traders said.

A large number of local steel mills without captive mines have been active in concluding bookings with local iron ore pellet producers, with the domestic price maintaining strong at $121-124/mt excluding local taxes and levies.

“The year had started with a forecast of a tightening of supplies of iron ore in the international market, triggering a shift to iron ore pellets, leading to strong pricing of pellets of local producers. But these demand-price dynamics have changed with the spread of the virus in China and uncertainty over production and demand of steel in that market. This has shifted the outlook for Indian pellet exports from positive to more negative,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.

“My personal estimate is that Indian prices will soften $5-10/mt from current levels, even after buyers return to the market as operational levels of Chinese steel mills and hence raw material restocking will remain low,” he added.


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