Pellet trade volumes in the domestic market increased sharply by 88% m-o-m to 808,250 tonnes (t) in April 2024 compared to 430,000 t in March 2024, according to data maintained with BigMint. The significant increase in sponge and finished steel prices in April bolstered pellet demand.
Factors driving up domestic pellet trade volumes:
- Hike in OMC offer: Odisha Mining Corporation (OMC) had conducted an auction for 3.6 million tonnes (mnt) of iron ore on 19 April, 2024 in which 2.6 mnt of iron ore got booked by the buyers out of which 1.16 mnt were lumps and 1.828 mnt comprised fines. Bids for fines have increased by INR 300-900/t for majority lots against last month’s bids. Steelmakers aggressive bidding strategies were fuelled by the uptick in pellet costs, as well as significant increases in sponge and finished steel prices. In addition, NMDC increased its list prices of iron ore fines and calibrated lump ore today by INR 200/t ($2/t) and INR 300/t ($4/t) respectively towards the last week of April.
- Surge in sponge prices: Sponge iron prices in Raipur, Raigarh, Durgapur, Jharsuguda and Bellary significantly increased by INR 1,082-3,383/tonne (t) in April, 2024 amid increase in finished steel sale. Active bookings from semi-finished and finished steel prices led to rise in sponge iron prices.
- Subdued export demand: BigMint’s India pellet (Fe 63%, 3% Al) export (FOB east coast) index was largely stable m-o-m to $99/t in April 2024. Global prices were not supportive enough for exports therefore pellet manufacturers in India diverted attention towards the domestic market where realisations were decently higher than exports.
Pellex overview
The monthly average of BigMint’s domestic pellet index, PELLEX, was assessed at INR 9,700/t, up by around INR 500/t m-o-m in April. Hike in sponge and other semi-finished prices coupled with NMDC’s hike in its list prices led pellet offers increased by central India pellet makers.
Outlook
Pellet prices in the Raipur region are expected to stay strong as steelmakers prepare for monsoon restocking, following by positive sentiments for pellets.