SteelMint: PELLEX inches down on limited buying interest and falling sponge offers

SteelMint’s bi-weekly domestic pellet index “PELLEX” inched down today by INR 50/t to INR 12,250/t DAP Raipur. No pellet deal has been reported in this publishing window on increased pellet offers. Raipur based pellet makers are holding their offers stable at around INR 12,450-12,750/t (DAP, Raipur).

Raigarh pellet offers have come down by around INR 300/t w-o-w to INR 11,600/t exw today.

According to conversation with few key buyers, it seems they are not interested to buy pellet at the current offers as they had bought pellet few weeks back and have sufficient stocks. Owing to falling P-DRI prices a decent gap has been created in the Raipur pellet offers and bids. NMDC’s DR-CLO continues to remain a preferable raw material for sponge maker for maintaining the better margin.

Pellet sponge (P-DRI) prices in Raipur have decreased sharply by around INR 1,100/t w-o-w to INR 24,900/t ex-plant this week.

However, as per the market sources report to SteelMint, a central India based pellet maker has concluded an export deal at $207-208/t CFR China. However, confirmation of this deal was pending till the time of publication this report. Few market participants highlighted that since ex-plant realization of export deal is higher, so sharp correction in domestic pellet offer seems less likely.

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 it was not considered for price calculation and weightage given 0%.
• Four firm offers from Raipur players were reported this week and only three offers were taken for price calculation at INR 12,450/t (DAP, Raipur) and the rest three from outside Raipur at INR 12,050-12,250/t (DAP, Raipur) and given a weightage of 100%.
• No firm bid was reported in this publishing window therefore not considered for price calculation and given no weightage in the index.

Calculation of Index:

Source-: SteelMint

Region-wise pellet deals and offers: