India: Coal inflation keeps pellet prices supported in Oct’21

Indian domestic pellets (Fe 63% grade) prices across major markets remained largely supported in Oct’21, data maintained with SteelMint shows.

Prices in major locations across India remained largely range-bound or inched up slightly towards end-October.

However, in mid-October, prices had seen a sharp increase owing to escalating coal prices. At the end of last month, pellet prices started falling as imported coal prices softened slightly after the Chinese government implemented some regulatory measures.

Portside prices of South African RB2 (5500 NAR) grade coal corrected by INR 8,000/t across key Indian ports over the course of one month.

In addition, limited quantity was being exported by Indian pellet makers on weak demand and subdued inquiries from China.

Prices and deals across regions:

• Raipur: Pellet offers in Raipur, Chhattisgarh in the beginning of the month were assessed at INR 13,000/t exw which towards the end of the month fell by around INR 300/t to INR 12,700-12,800/t exw.

SteelMint recorded around 90,500 t of pellet deals from Raipur in Oct’21.

• Bellary: Pellet offers in Bellary, Karnataka, were assessed at INR 11,700-11,800/t in early-Oct’21. These increased by INR 300/t to INR 12,000-12,100/t exw by the end of the month.

Deals of around 65,000 t of pellets were recorded from Bellary in Oct’21.

• Kandla: Pellet (Fe 63/64% grade) prices in Gujarat’s Kandla, in early-Oct’21, were assessed at INR 11,000-11,500/t DAP Kandla. Prices increased sharply by INR 2,000-2,500/t to INR 13,000-13,500/t DAP Kandla towards the mid of the month.

Around 27,000 t of pellet deals were concluded in Oct’21, as per SteelMint’s assessment.

• Rourkela: Offers in Rourkela, Odisha were recorded at INR 12,000-12,300/t exw at the start of the month. Prices in mid-October jumped to INR 12,900-13,200/t exw which, towards the end of the month, were at INR 12,500/t exw.
• Raigarh: Pellet prices in Raigarh, Chhattisgarh in early-October were at INR 12,000/t exw which increased sharply to INR 13,500/t exw in mid-month. However, these again dropped to the same levels seen at the start of the month by end-October.

SteelMint confirmed around 26,000 t of pellets deals in Oct’21.

• Jharsuguda: SteelMint heard offers at INR 12,300-12,500/t exw in Jharsuguda, Odisha at the beginning of October. Towards late-October, these decreased slightly to INR 12,100/t exw. It may be noted that last month, the pellet plants were under maintenance shutdown for around 10 days.

A total of 16,000 t of pellet deals were recorded in Oct’21 from Jharsuguda.

• Jamshedpur: Pellet makers in Jamshedpur, Jharkhand were not actively offering in the merchant market. As per sources, they had undertaken maintenance shutdown in October.

Short-term outlook

Indian pellet prices are likely to drop further owing to factors like falling coal prices, subdued demand for sponge iron and low finished steel sales.