SteelMint’s iron ore pellet (Fe 63%) index, PELLEX, which monitors trade volumes and prices in the key central Indian market of Raipur recorded total transactions at 125,000 t in Aug’21 – 76% higher than 71,000 t in Jul. Trade volumes breached the 100,000 t level for the first time since Apr, SteelMint data shows.
Weak demand, falling exports
Although trade volumes increased significantly, the index fell to a five-month low in the second half of Aug on weak buying interest and fast-declining export realisations due to weak demand from China.
Sponge iron producers in Chhattisgarh held back purchases as pellet export offers (ex-plant) were lower than domestic prices that created the possibility of a further reduction in domestic prices. This, in turn, led to a drying up of buying enquiries in the Raipur market.
India’s leading iron ore producer, NMDC, cut prices of iron ore fines and lumps in the beginning of Aug, although not as drastically as in Sept, which weighed on pellet prices.
Around 80,000 t of deals were recorded by SteelMint from 21-24 Aug. The domestic pellet market witnessed downward pressures on aggressive domestic sales as a result of falling export realisations. SteelMint’s India pellet export index slid to a nine-month low towards end-Aug. India exports roughly 1 mn t of pellets every month with around 90% of exports to China alone, which is witnessing rapid steel production cuts.
Prices drift down
The weighted average pellet price in Aug was assessed at INR 13, 556/t DAP Rapiur, decreasing by over 11% from INR 15,300/t in Jul. Prices fell sharply by INR 1,150/t to INR 12,150/t DAP Raipur on 24 Aug. Merchant iron ore producers in Odisha slashed prices by over INR 1,500/t towards end-Aug that contributed to pellet market sentiments weakening further.
Pellet prices in Raipur dropped marginally to INR 12,100/t on the last day of the month on falling buying interest as the market waited for NMDC’s price revision in the beginning of Sept. Following NMDC’s price cuts by INR 1,000/t for iron ore fines and lumps, the index has plummeted in the beginning of Sept hovering at around INR 11,300/t DAP Raipur at present.
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