The brief upturn in ex-India pellet trade has been reversed sharply, with prices suffering a big setback as the fundamentals of weak demand in China dominate the market and sellers have been quick to divert export allocations to sales in the local market, with no export deals reported despite some offers falling below the $100/mt mark, SteelOrbis learned from trade and industry circles on Friday, September 6.
Ex-India pellet prices have fallen by $10/mt to the range of $99-102/mt CFR China and, even though local prices are also down, sellers were still heard to be shifting volumes for domestic sale.
According to the sources, the sudden downturn in the market conditions vindicated the unsustainability of the short but sharp surges in prices and trade volumes seen in earlier weeks, which had been attributed to speculation by a section of the market.
The sources said that negative finished steel margins in China and hence the preference of mills for lower-priced fines prevailed over the brief speculative gains, resulting in pellet prices falling back and wiping out much of the earlier gains.
According to two officials at pellet producing plants, local prices of pellets have also lost ground and the differential between the latest export and domestic prices narrowed. Local prices have decreased by INR 800/mt ($10/mt) to around INR 5,600/mt ($66.74/mt) on ex-plant basis, but are still more profitable for producers to sell locally.
“Demand from mills in China is fundamentally weak owing to weak finished steel prices. The market is returning to normal bearish conditions,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“The question now is how far below the $100/mt mark prices will go from here on. Local sellers will hold back offers until there is some clarity on the market direction,” he said.