SteelMint: PELLEX remains stable in recent deals

SteelMint’s bi-weekly domestic pellet index “PELLEX” stands stable at INR 12,050/t DAP Raipur. Deals of around 72,000 t have been reported for the Raipur market so far this week. A central India based pellet maker has concluded a 50,000t pellet deal with a Gujarat based steel maker for Jan’21 delivery, SteelMint learned from sources. Another deal for 20,000 t pellet for Raipur market yesterday at INR 12,150/t (DAP, Raipur).

Pellet makers in Raipur kept their offers stable at INR 12,000/t (ex-plant). Pellet offers from Jharsuguda are at 12,150/t (DAP, Raipur) and they have concluded a deal for Raipur also for 2,000 t yesterday.

Despite this few steel makers talking to SteelMint prefer NMDC lumps for better margins. Most of them are reluctant to buy pellet at the increased offers.

Pellet sponge (P-DRI) prices have increased by around INR 900/t w-o-w to INR 26,000/t exw, Raipur. However, on a daily basis, prices remained stable.

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.

• Three pellet deals have been concluded in this publishing window at around INR 12,150/t (DAP,Raipur) therefore it was considered for price calculation and weightage given 80%.
• Three firm offers were reported this week and all offers were taken for price calculation at INR 12,150/t (DAP, Raipur) and the rest three from outside Raipur at INR 12,150-12,500/t (DAP, Raipur) and given a weightage of 20%.
• No firm bid was reported in this publishing window hence not considered for price calculation and given weightage 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 10,700/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 better realization in the domestic market.

Calculation of Index:

Source-: SteelMint

Region-wise pellet deals and offers: