SteelMint: PELLEX up sharply by INR 500/t in the recent deals

SteelMint’s bi-weekly domestic pellet index “PELLEX” has increased by INR 500/t to INR 10,400/t today (13th Nov’20) DAP Raipur, in the recent deals. Around 70,000 t pellet deal has been concluded by a Raipur and outside the city-based pellet maker in this publishing window.

Raipur based pellet makers have increased the offers by INR 700-800/t at INR 10,500-/t (ex-plant) recently. Offers are offering at 8-years high levels.

Following hike in raw material offers from Odisha last week led the fines prices hovering in the market. However, acute shortage of iron ore still a concern for steel makers. Essel mining hike iron ore offers further in INR 500/t in fines and INR 700/t in Lumps recently this week.

On the other side, Pellet sponge (P-DRI) prices are also increased sharply by around INR 900-1000/t w-o-w to INR 22,900/t exw, Raipur. On a daily basis sponge offers increased further today by INR 300/t.

SteelMint’s benchmark price assessment for billet hike by INR 800/t w-o-w.

Market overview-: Pellet prices in other regions like Durgapur and Bellary have increased sharply w-o-w around INR 600-750/t amid scarcity of high-grade iron ore and concluded deals.

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 around 70,000 t pellet has been concluded by a Raipur based pellet makers in this publishing window at INR 99,500-10,400/t (DAP Raipur). This transaction was taken into consideration for price calculation and weightage given 80%.
• Three firm offers were reported this week at INR 10,650/t (DAP, Raipur) and the rest four from outside Raipur at INR 10,650-10,800/t (DAP, Raipur) which have been given a weightage of 20%.
• No firm bids reported and 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 8,500/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.

Calculation of Index:

Source-: SteelMint

Region-wise pellet deals and offers: