Indian iron ore pellet exports may slow in near term
Indian iron ore pellet exports may be slower in the near term because of congestion at major shipping ports on the east coast.
Several Indian iron ore mines have rushed to supply low-grade fines to China from major east coast ports such as Dhamra, Paradip, Gopalpur and Gangavaram, lengthening shipping queues.
"Not only are ports congested but getting wagons and trucks to haul pellet from plants to ports is also harder because of the sudden boom in iron ore exports from Odisha," said an executive with a pellet producing company.
A surge in demand for low-grade fines in China since November 2018 has lifted prices of mainstream grades such as SSF fines and Fortescue blended fines, prompting cost-conscious Chinese mills to seek more tonnes of lower-priced Indian low-grade fines.
The Argus 58pc Fe price was assessed at $112.50/dry metric tonnes (dmt) on Monday. While regular exporters of low-grade fines have stepped up overseas sales, even mines that do not usually export much have increased sales to China to cash in on the demand, creating logistical hurdles for pellet exporters.
Offers for 57pc Fe Indian fines were at $94/dmt cfr China today, while an offer for 54pc Fe fines was at $86.50/dmt with mid-July loading dates.
An Odisha-based pellet exporter has stopped taking fresh export orders until the end of the month as it struggles to meet pending deliveries. The eastern state of Odisha is the country's largest iron ore producer, supplying most of the pellet that is sold domestically or exported.
Haulage problems and congestion at ports have created an additional cost of $2/dmt for pellet exporters in recent days. Large exporters are not keen to book new orders because of the hassle of waiting for haulage at plants and ports, said a senior executive at an east India-based producer.
Demand for Indian pellet remains stable in Chinese markets, although there were few seaborne deals this week. Offers were at $137-140/dmt for near-month deliveries.
source: Argus Media
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