SteelMint: PELLEX falls marginally by INR 50/t as trades dry up

SteelMint’s bi-weekly domestic pellet index, PELLEX, fell marginally by INR 50/t to INR 15,950/t, DAP Raipur. No deal was reported in this publishing window. The market continues to remain silent and trades have dried up on falling sponge iron prices and production cuts amid subdued finished steel sales in the domestic market.

Raipur-based pellet producers have kept offers unchanged, with current offers for Fe 62.5%/63% pellet standing at INR 15,500-16,000/t, exw. Jharsuguda-based pellet producers have kept the offers stable. However, there is quite a big gap between bids and offers.

Though pellet prices in Bellary have dropped further, no deals were heard concluded for the Raipur market. SteelMint’s assessment for Bellary iron ore pellet (Fe 63%) stands at INR 12,900/t, exw, lower by INR 150/t compared to the last assessment on 22 Jun’21.

A majority of buyers are showing little interest in lower bids against offers prevailing in the market. Buyers are quite sensitive to hikes in raw material costs and that happens to be the reason why they have decreased steel production by around 50% to reduce costly pellet consumption, as per market sources.

P-DRI sponge prices in Raipur moved down further by INR 550/t w-o-w to INR 30,000/t, exw, against last week’s price at INR 30,550/t. SteelMint’s benchmark sponge P-DRI (FeM 80%) prices fell by INR 300/t on 25 Jun’21.

Indian pellet market overview-: Indian pellet prices across regions are stable except southern India and Barbil in Odisha. A major Indian steel producer has booked around 200,000 t of iron ore pellets from producers in Odisha. The deal has been heard concluded at INR 15,500-15,800/t, loaded on to wagon.

Rationale: 

• PELLEX has been derived using data points: i.e., trades, offers and bids. You can download the detailed methodology by clicking on this link Click here  
• No deal has been reported in this publishing window and hence not considered T1 for index calculation and kept 0% weightage.
• Six firm offers and indicative prices were reported. Three were from Raipur and the rest from outside the state capital. All the offers were taken for price calculation and given a weightage of 100%.
• SteelMint also received three bids and considered two bids for price calculation of the Index.

Region-wise pellet offers and deals: