Ex-India pellet prices have staged a smart recovery tracking the rise in prices of fines in China and, though overall trade activity has been moderate, a few large-volume deals at high prices have boosted sentiments and the outlook, SteelOrbis learned from trade and industry circles on Friday, July 5.
Sources said that ex-India pellet prices gained $7/mt to the range of $118-120/mt CFR and, though the number of trades was on the lower side, at least two large-volume deals confirmed over the past week instilled optimism for the short-term among local sellers.
According to the sources, an Odisha-based pellet producer reported a deal for 55,000 mt at $ 122/mt CFR China, while another pellet producing arm of an integrated steel mill confirmed a trade for 60,000 mt at $123/mt CFR.
They said that, despite the rise in shipments from Australia and Brazil, iron ore fine prices in China hardened and this was being reflected in seaborne pellet prices.
“Even though not many sellers were able to convert offers to deals at higher prices over the past week, reports of the few large-volume deals have made the market more confident going forward, at least in the short term,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“We expect more sellers to enter the market in the coming days and to be successful in trading at higher levels. But the market is not without headwinds either. Participants will need to be watchful on how much and how fast supplies from Brazil and Australia rise. A sustained rise in shipments without a stimulus to the property and real estate market in China and the resultant demand impact on finished steel will check the raw material uptrend,” he said.
At the same time echoing similar caution, an official at an Odisha-based steel mill said that the current recovery in pellet prices comes at a time when finished steel output in China is largely flat. Hence, the rise seen over the past few days could be attributed partly to speculative buying and partly to a slight drawdown on port stocks rather than due to any uptick in demand from blast furnaces.