Thin demand weighs on Indian iron ore pellet exports

Market: Metals
17/01/24

Indian iron ore pellet exports are likely to recover in the financial year ending March 2024 compared to a year earlier, but may not return to levels seen before 2022 because of thin Chinese demand.

India exported 10.7mn t of iron ore pellets in the 2023 calendar year, up by 45pc from 7.4mn t in the same period of 2022. The increase was on account of a halt in exports because of a 45pc duty on iron ore pellet exports during May-November 2022.

Narrow margins at Chinese mills are expected to keep Indian volumes below 2021 levels, a Hebei-based steel mill manager said. "Pellet imports in January-March this year may pick up as Indian sellers look to lock in sales at the financial year end, but demand from Chinese steel mills may not pick up much if mills' margins remain negative," he added.

Losses at Chinese steel mills have narrowed recently but the overall margin has remained negative, with the loss for rebar narrowing to 100-150 yuan/t ($13.90-20.90/t) in mid-January from around Yn200-250/t in December, and hot-rolled coil (HRC) recovering to near-breakeven levels.

India exported around 7.9mn t of pellet from April-December 2023, while it exported 13.8mn t of pellet in the April 2020 to March 2021 fiscal year.

The Argus 63pc Fe, 3.5pc alumina pellet index was assessed at $137/dry metric tonne (dmt) on 16 January, down by $11/dmt from last week. The 63pc Fe, 2pc alumina index was assessed at $145/dmt, down by $10/dmt. February iron ore 62pc Fe paper swaps fell by around $10/dmt on 16 January from a week earlier.

By Kitty Xie

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