India: Domestic pellet prices up 11%, m-o-m, in March on healthy export bookings

Domestic pellet prices in the key Indian markets remained on the higher side in the beginning of March 2022, but declined thereafter on falling export demand and softening domestic sponge iron prices.

However, the monthly average of SteelMint’s PELLEX was up INR 1,390/t m-o-m to INR 13,810/tonne (t) in March.

Prices in key markets

• Raipur: Prices of Fe 63% pellets rose by INR 800/t m-o-m to INR 13,500-13,800/t exw in March.
• Bellary: Prices inched up by INR 200-400/t to INR 10,500/t exw.
• Barbil: Fe 63% pellet prices rose by INR 1,000-1,200/t m-o-m to INR 12,500-12,700/t on loaded basis.
• Jharsuguda: Pellet offers were assessed at INR 13,000/t exw, higher by INR 1,200-1,400/t compared to February.
• Jamshedpur: Prices stood at INR 13,000/t exw, increasing by INR 1,000-1,400/t m-o-m.
• Kandla: Prices rose by INR 1,300/t to INR 14,500/t DAP basis.

Deals and trade:

SteelMint recorded a total of 401,500 t of trade deals in March.

Factors driving domestic pellet prices –

• Higher sponge iron prices

Domestic sponge iron prices in early-March remained at elevated levels, reaching up to INR 44,000/t backed by record-high thermal coal prices.

SteelMint’s assessment of pellet-based sponge iron (PDRI) prices in Raipur stood at INR 40,900/t on exw basis in March, increasing by INR 6,100/t m-o-m.

• Spike in export realisations

The Russia-Ukraine conflict created new opportunities for Indian pellet markets 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.

• Weak domestic demand

Domestic demand for pellets remained weak during the month due to higher prices. Increasing raw material prices kept pellet prices supported in the first half of March 2022. However, prices declined later.

As per CoalMint’s assessment, portside RB2 (5500 kcal/kg NAR) coal prices rose by INR 5,490/t m-o-m to INR 21,480/t in March.

SteelMint’s Odisha iron ore Fe 63% fines index moved up by INR 510/t to INR 6,750/t ex-mines in March compared to the previous month.

Outlook

SteelMint expects domestic pellet prices to remain under pressure in the near term driven by falling sponge iron prices, weak domestic demand as well as lower ex-plant realisations in exports.