Iron ore pellet prices in India remained on the higher side throughout February’22, SteelMint assessment shows. The consistent increase in raw materials (iron ore and coal) and sponge iron prices kept pellet prices supported. However, demand remained moderate.
SteelMint’s bi-weekly pellet index, PELLEX, stood at INR 12,650/t on 25 February, up INR 500/t m-o-m.
Prices across key markets:
- Raipur: Prices of Fe 63% pellets rose by INR 1,000/t m-o-m to INR 12,700-13,000/t exw in February.
- Bellary: Prices in Bellary remained largely stable m-o-m at INR 10,100-10,300/t exw.
- Barbil: Fe 63% grade prices were up by INR 1,400/t m-o-m to INR 11,500/t on loaded basis.
- Jharsuguda: Pellet offers were assessed at INR 11,500/t exw, higher by INR 600-800/t compared to January.
- Jamshedpur: Prices stood at INR 11,600-12,000/t exw, increasing by upto INR 1,300/t m-o-m.
- Kandla: Prices rose INR 500/t m-o-m to INR 13,200/t on DAP basis.
Deals and trade:
SteelMint recorded a total of around 370,000 tonnes (t) of trade deals in February, down 26% m-o-m.
Factors keeping pellet prices high:
- NMDC hikes iron ore prices
State-owned miner NMDC had raised iron ore prices by up to INR 200-350/t for February deliveries. The increase in Odisha iron ore prices on tight supplies of high-grade ore resulted in the hike in NMDC’s offers. Post revision, iron ore fines prices stood at INR 4,260/t and DR CLO at INR 6,720/t on FOR basis, excluding royalty and taxes.
Increase in domestic iron ore prices supported pellets prices.
- Uptrend in coal prices continues
Portside prices of South African RB2 (NAR 5500 kcal/kg) coal reached INR 17,500/t exw-Gangavaram last month, higher by INR 2,500/t m-o-m, as per CoalMint data.
Limited stocks at Indian ports and reduced vessel arrivals from major exporting countries due to higher prices lifted portside coal prices.
- Sudden spike in export realisation
Towards the end of last month the geopolitical flare-up in Russia and Ukraine created new opportunities for Indian pellet makers to supply to Europe.
A significant shift in demand and a sudden rise in enquiries for prompt pellet cargoes from the EU propped up export prices.
However, Chinese demand is still weak and realisations were lower compared with Europe.
Sponge iron prices rally
Indian domestic sponge iron (PDRI and CDRI) prices continued to rally in February, as per SteelMint assessment.
Notably, prices hit an all-time high on 1 Mar’22 since 2010, the period from which SteelMint has been maintaining its data.
The monthly average prices of pellet-based sponge iron (PDRI) stood at INR 34,800/t exw. Iron ore-based sponge iron (CDRI) was assessed at INR 36,730/t exw in February.
Outlook
Domestic pellet prices are expected to remain high on the back of high raw material costs and better realisation from exports to the EU.
As SteelMint reported, Indian producers saw a sudden rise in enquiries for prompt pellet cargoes. Deals of over 350,000 t were concluded from Indian suppliers to the EU in the first week of March.
Meanwhile, domestic demand will continue to remain moderate as sponge iron players are largely procuring NMDC DR CLO due to high pellet and coal prices.
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