SteelMint: PELLEX up by INR 200/t, market turns silent on increasing offers

SteelMint’s bi-weekly domestic pellet index “PELLEX” has increased further by INR 200/t to INR 11,800/t DAP Raipur today (20th Nov’20). No deal was heard to be concluded by Raipur pellet maker in this publishing window. As per the market sources, there is limited buying interest for pellet at increased offers.

However, few pellet makers (Godawari Ispat Ltd and Sarda energy and power Ltd) have increased pellet offers by INR 400-700/t to INR 12,000/t (ex-plant) recently. Rest pellet makers in Raipur have kept offers unchanged to INR 11,500/t (ex-plant).

Pellet sponge (P-DRI) prices also increased sharply by around INR 1,300/t w-o-w to INR 25,400/t exw, Raipur. On a daily basis sponge offers have remained stable.

Market overview-: Pellet prices like Bellary has increased offer further w-o-w by around INR 700-800/t amid hike in sponge offers. However, in other regions prices are mostly stable and few pellet makers from eastern regions are still not offering pellets and have taken a maintenance shutdown.

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.

• No pellet has been concluded by a Raipur based pellet maker in this publishing window. Therefore, it was not taken into consideration for price calculation and weightage given 0%.
• Four firm offers were reported this week but only three offers were taken for price calculation at INR 11,650-12,150/t (DAP, Raipur) and the rest four from outside Raipur but only two offers were taken at INR 11,750/t (DAP, Raipur) and given a weightage of 100%.
• 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 9,200/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.

Calculation of Index:

Source-: SteelMint

Region-wise pellet deals and offers: