Ex-India pellet prices have staged a sharp rebound both in terms of price and trade volumes on the back of strong demand for January deliveries amid restocking ahead of the holidays in China and steady gains reported in spot and futures trade contracts in the iron ore fines market, SteelOrbis learned from trade and industry circles on Friday, December 6.
Sources said that ex-India pellet prices have surged by around $6/mt to the range of $118-120/mt CFR China, with a greater number of sellers confirming large-volume export bookings as the rise in export prices had significantly narrowed the differential with local sales prices, prompting producers to increase export allocations.
The sources said that an eastern India-based pellet producer confirmed a booking of 75,000 mt at $117/mt CFR, with slightly higher alumina content of eight percent, while 60,000 mt of a higher grade pellet of alumina content of less than three percent was booked by another seller at $120/mt CFR.
According to the sources, a greater number of high-volume trades are currently under negotiations with a few sellers seeking even a high price at $122/mt CFR as many port stocks have been diverted to inland stockyards for local sales during the recent prolonged slump in export trade activity.
Following the latest surge in ex-India prices, the gap with local sales price has narrowed to around INR 500/mt ($6/mt) and, even though the latter is still marginally higher than export realizations, sellers have been banking on the continued depreciation of the rupee and resultant gains from the currency exchange rate in January and February to more than bridge this gap.
“Ex-India pellet prices are moving up fast. The pace of the increase in local pellet prices in contrast is easing off. Over the past week, pellet plants close to ports have been more aggressive in concluding export trades, while inland pellet plants have been selling more volumes in the local market. But this will change and more inland plants will move volumes to port stockyards as the ex-India pellet price is poised for consolidation at higher levels as restocking by buyers representing mills in China increase activity,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“We have received reports that pellet port stocks in China are down 0.30 million mt as of the end of November and this will support restocking activity,” he added.