Domestic pellet prices in the key Indian markets saw a declining trend in April, falling by around 20% m-o-m, as per SteelMint’s assessment. Weak domestic demand and fall in sponge iron offers weighed on pellet prices.
The monthly average of SteelMint’s PELLEX was down by 13% m-o-m to around INR 11,975/tonne (t) in April.
Prices in key markets
- Raipur: Pellets prices fell sharply by INR 2,300/t m-o-m to INR 11,200-11,500/t exw in April.
- Bellary: Prices in Bellary inched down by INR 500/t to INR 10,000/t exw.
- Barbil: Fe 63% grade prices dropped by INR 2,500-2,700/t m-o-m to INR 10,000/t on loaded basis.
- Jharsuguda: Pellet offers were assessed at INR 10,300/t exw, lower by INR 1,300-1,500/t compared to February.
- Jamshedpur: Prices stood at INR 10,300/t exw, decreasing by INR 2,500-2,700/t m-o-m.
- Kandla: Prices fell by INR 1,300/t to INR 13,200/t DAP basis.
Deals and trade:
SteelMint recorded a total of around 448,500 t of pellet deals in April, up 12% compared to March.
Factors weighing down pellet prices
- Falling in sponge iron prices
Domestic sponge iron prices declined in the beginning of the month. However, in mid-April, prices picked up to around INR 38,800/t but again started falling in end-April.
The monthly average of SteelMint’s sponge iron (PDRI) prices in Raipur stood at INR 35,900/t exw in April, down INR 4,120/t m-o-m.
- Weak domestic demand
Domestic pellet demand remained weak throughout the month due to the bid-offer disparity. Buyers resisted purchasing at higher offers amid bearish sentiments, hence, lowered their bids.
In addition, a few buyers stayed away because of sufficient stocks with them while others found NMDC’s iron ore offers more cost-effective, which kept pellet demand under pressure.
It may be mentioned that state-owned miner NMDC hiked iron ore prices by up to INR 200/t ($3/t) for April deliveries.
- Baila lump (6-40mm, Fe 65.5%): INR 6,100/t (+100/t)
- DR CLO (10-40mm, Fe 67%): INR 7,320/t (+120/t)
- Baila fines (Fe 64%): INR 5,160/t (+200/t)
Prices are on FOR basis, excluding royalty and taxes.
- Decline in export realisations
Pellet export demand saw a significant fall last month due to lower bids from China. The operating rates and capacity utilisation of steel mills, primarily in the Tangshan region, were severely impacted due to Covid control measures. This impacted demand for raw material too.
SteelMint’s pellet export index in April was down marginally by $0.25/t m-o-m to $157.25/t FOB east coast India.
Meanwhile, domestic realisations were largely at par with exports in end-April. As per SteelMint’s analysis, domestic pellet (Fe 63%, 3% Al) offers were at INR 10,000/t ($131/t) loaded on to wagon for Barbil, eastern India. On the other hand, SteelMint’s pellet export prices on ex-plant basis for the Barbil region were at around INR 9,600-10,000/t ($125-131/t) exw on 27 April.
Outlook
Domestic pellet prices in the near term may continue the downtrend due to persistent weak domestic demand as well as lower export realisations along with decreasing sponge iron prices.
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