SteelMint: PELLEX up by INR 400/t in recent deal

SteelMint’s bi-weekly domestic pellet index “PELLEX” has increased by around INR 400/t today (06th Nov’20) to INR 9,750/t, DAP Raipur in recent deal. Around 15,000 t pellet deal has been concluded by a Raipur based pellet maker in this publishing window.

Two Raipur based pellet makers have increased offer by around INR 100-200/t to INR 9,700-9,800/t (ex-plant) in this week.

Pellet makers from Raigarh and Jharsuguda have hiked offers further this week. Raigarh based pellet maker increased its offer by around INR 500-600/t to INR 9,700-9,800/t exw, recently.

Pellet sponge (P-DRI) prices have increased by around INR 1,200/t w-o-w to INR 22,900/t exw, Raipur. However, on a daily basis sponge prices have decreased marginally by INR 100/t today.

Market overview-: Pellet prices in other regions like Durgapur and Bellary have also increased by INR 500-600/t w-o-w amid scarcity of high-grade iron ore and limited .

In the mid of this week National Mineral Development Corporation (NMDC) has increased prices by 4-5% for Nov’20, . The prices for Baila lump and fines have been increased by INR 150/t and that of DR CLO by INR 170/t. With the recent hike announced, NMDC prices have hit 2-year high levels.

Rationale – PELLEX has been derived using five data points: i.e trades, offers, bids, substitute parity, and export realizations. You can download the detailed methodology by clicking on this link  Click here.

• Deal for 15,000 t pellets have been concluded by Raipur based pellet makers in this publishing window at INR 9,650/t (DAP Raipur). This transaction was taken into consideration for price calculation and weightage given 80%.
• Two firm offers were reported this week at INR 9,950/t (DAP, Raipur) and the rest three from outside Raipur at INR 9,950-10,250/t (DAP, Raipur) which have been given a weightage of 20%.
• One firm bid was reported at INR INR 9,150/t (DAP, Raipur) but not considered in price calculation in this publishing window, and given a weightage of 0%.
• SteelMint calculated the price at which Raipur pellet can displace NMDC lump in the sponge rotary kiln feed (substitute parity) on a DAP Raipur basis at INR 8,100/t and given a weightage of 0%.
• The export realization factor has not been considered as pellet makers are less active in exports owing to an increased domestic realization. With increase in domestic demand, GPIL has shifted sales in local market and reduced export volumes, company mentioned its quarterly presentation. Pellet prices in India have hit 2-year high on rising demand and shortage of iron ore.

  Calculation of Index:
  
  Source-: SteelMint

Region-wise pellet deals and offers: