Ex-India pellet prices have continued to suffer setbacks and have fallen to a seven-year low, with unviable prices forcing sellers to retreat from the market, resulting in moribund trade conditions, SteelOrbis learned from trade and industry circles on Friday, September 13.
Ex-India pellet prices have lost another $5/mt, falling to the range of $94-97/mt CFR, the lowest in last seven years. But market sources believe this is a bottom.
According to sources, the demand side in China has become more bearish amid weak margins from finished steel sales, forcing mills to seek cheaper alternative raw materials like low grade fines to meet lower demand after output cuts.
Following the slump in ex-India prices and the slight improvement in local sales, the differential between export and local prices has widened to INR 2,000/mt ($24/mt) on ex-plant basis, up from INR 800/mt ($10/mt) ex-plant a week ago, prompting sellers to halt submission of offers and to divert volumes to local merchant sales.
“Higher-priced pellets are not an option for mills in China when finished steel prices are under severe pressure. Also, mills are in no mood to commit import trades and restock ahead of the national holidays in early October,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
However, considering the steel and iron ore futures rises in China, pellet prices may rebound next week amid an improved mood, after the previous long-standing declines.