Export prices for Indian iron ore pellet remain high

Export prices of Indian iron ore pellet have remained stable so far this month at record-high levels reported in August, prompting some producers to cut back on domestic sales.

India's state-controlled KIOCL shipped 50,000 dry metric tonne (dmt) of 63pc pellet at $148.5/dmt fob Mangalore on 12 September. The company did not say where the cargo is heading.

A large Indian steel mill is likely in negotiations with a South Korean buyer to sell a 64pc pellet cargo at $154/t cfr, although no deal has been concluded yet, according to market participants.

Export demand has increased sharply over the past month, leaving Indian suppliers struggling to meet orders inflow. Some producers have suspended domestic sales to meet export demand.

Tighter global supply of pellet and increased Chinese demand because of environment-related restrictions on pelletising units have lifted prices.

Indian pellet — demand of which has largely been from China over the past few years — has been recently gaining interest from Japan, South Korea and Europe.

Essar Steel is offering cargoes at $145-148/dmt fob Paradip, with China and Japan as possible destinations. Jindal Steel recently sold a pellet cargo at $153/t cfr, but the destination is unknown. Jindal and Essar are two of India's largest pellet producers.

Indian pellet producers have benefited from a weakening rupee, which is currently at a record low of Rs72 against the US dollar. This has helped lift their earnings from export sales in rupee terms.

Domestic iron ore pellet offers were reported at Rs8,200/t ($114.60) ex-works in south India and around Rs9,000/t in the northwestern state of Rajasthan.

India's Supreme Court is hearing a plea to allow pellet exports from the southern state of Karnataka, which has an iron ore production cap of 35mn t/yr. The court banned iron ore exports from the state in 2010 to curb illegal mining, but a court-appointed monitoring panel for the state's iron ore mines recently recommended allowing pellet exports.