SteelMint: PELLEX remains stable due to absence of trades

SteelMint’s bi-weekly domestic pellet index “PELLEX” stands stable at INR 12,200/t DAP Raipur. No pellet deal has been reported in this publishing window. The market has remained silent from almost a week’s time.

Most of the buyers either having sufficient stocks of pellet or have pending dispatches to be made from the previous bookings made. In addition to it, NMDC’s DRCLO is still lucrative than pellets as sponge makers are fetching a decent margin.

According to the market sources, NMDC is expected to announce price revision shortly which may be a driving factor for market sentiments. NMDC’s iron ore rake movement from its Chhattisgarh mines to state-based steel units has moved up 6% to 82 rakes (0.32 mn t) in Dec’20 compared to 77 rakes (0.30 mn t) a month ago, as per railway movement data maintained with SteelMint.

Raipur based pellet makers have kept their offers stable. The current offers stand around INR 12,150-12,450/t (DAP, Raipur). Pellet offers from Jharsuguda are at 12,150-12,200/t (DAP Raipur).

However, pellet sponge (P-DRI) prices in Raipur have increased by INR 600/t w-o-w to INR 26,600/t ex-plant against last INR 26,000/t last week. However, on a daily basis sponge prices have 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.

• No deal has been concluded in this publishing window therefore not considered for price calculation and weightage given 0%.
• Three firm offers from Raipur players were reported this week and all offers were taken for price calculation at INR 12,150-12,450/t (DAP, Raipur) and the rest three from outside Raipur at INR 12,150-12,600/t (DAP, Raipur) and given a weightage of 100%.
• 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 11,000/t and given a weightage of 0%.
• The export realization factor was not considered owing to no firm deals being reported. Hence, pellet export realization was given a weightage of 0%.

Calculation of Index:

Source-: SteelMint

Region-wise pellet deals and offers: