The total volume of trade recorded by SteelMint’s domestic iron ore pellet index, PELLEX, stood at 30,000 t in Jun’21 – a decline of over 64% compared with 85,000 t in May, SteelMint data shows. Trading remained subdued on weak steel market sentiments, continuing a steady decline from 163,000 t in April.
Trading on slow track
Fast-declining sponge iron prices on shrinking steel margins led to a wide divergence in bids and offers. High pellet (Fe 63%) prices, delivered at place (DAP)-Raipur, were due to persistently firm domestic iron ore prices. While Raipur pellet producers shied away from reducing offers, south India- and Odisha-based producers continued to explore the Raipur market with competitive offers.
Only three deals were reported in the first half of Jun, as the monthly weighted average price for Raipur pellet fell by a meagre INR 50/t to INR 16,100/t in comparison with May, as per SteelMint data. Two confirmed transactions for 10,000 t and 5,000 t were reported on 15 Jun at INR 15,750/t and 15,950/t, DAP Raipur, respectively for Fe 62.5% and Fe 63% grade pellet.
High pellet prices and sliding sponge iron prices have dampened buying sentiments. Pellet sponge (P-DRI) prices have slipped to INR 28,850/t exw- Raipur at present against INR 30,800/t on 15 Jun on account of depressed semi-finished steel sentiments due mainly to production cuts by furnaces.
Outlook
Although prices have inched down to INR 15,700/t of late, the market is awaiting NMDC’s price announcement for Jul. In the event of a decrease in iron ore prices, however marginal, it is believed that pellet prices could soften somewhat. That said, iron ore supply concerns amid impending expiry of key leases in Odisha could prevent prices from declining beyond a level.
On the other hand, rising demand for high-grade ore in China and subsequent hike in pellet export offers from central India could keep domestic prices supported.
The onset of monsoons and seasonal slowdown in long steel prices could exert further pressure on sponge iron and pellet prices. The news of the primary mills slashing steel prices across products by INR 1,200-2,000/t is sure to exert some downward pressure on prices. However, the reduction is deemed to be a temporary one at best as domestic prices are still at a discount to those of landed imports.
PELLEX
PELLEX monitors the dynamics of India’s largest merchant pellet market – Raipur. Along with recording sales and offers from Raipur-based producers, the index also tracks deals concluded by pellet producers based in other major markets of the country – Odisha, Karnataka and western India – for sponge iron manufacturers in Raipur. It is a mathematically precise index aiming to provide accurate price assessment for traders.
Leave a Reply