India: Domestic pellet prices inch up in July on rise in sponge iron prices

Domestic pellet prices recovered by as much as 11% m-o-m in July on the back of improved buying interest supported by an increase in sponge iron prices. Seasonal uptick in raw material and steel prices during the month also lent support to pellet prices.

SteelMint’s pellet index, PELLEX, edged up by INR 690/t m-o-m to INR 8,620/t exw-Raipur in July as against June.

However, trade volumes were lower compared to last month. Around 558,000 t of pellet deals were concluded in July, down 28.3% m-o-m compared to 778,250 t in June.

Prices across key markets

• Raipur: The monthly average Fe 63% pellet prices were up INR 450 m-o-m to INR 8,690/t exw in July.
• Bellary: Prices in Bellary moved up by around INR 950/t to INR 9,730/t exw last month.
• Barbil: Monthly average Fe63% grade prices rose by INR 360/t m-o-m to INR 7,340/t on loaded basis.
• Jharsuguda: Pellet offers were assessed at INR 7,730/t, higher by INR 430/t compared to June.
• Jamshedpur: Average prices stood at INR 7,770/t exw, increasing by INR 490/t m-o-m.
• Kandla: Prices fell by slightly INR 250/t to INR 10,130/t DAP basis.

Factors supporting pellet prices

• Hike in sponge iron prices: Pellet prices remained largely supported by the rise in domestic sponge iron prices. Sponge iron prices were on an uptrend last month on active demand as steel prices rebounded in the northern region, especially Punjab. SteelMint’s assessment of pellet-based sponge iron (PDRI) prices in Raipur stood at INR 34,050/t exw in July, higher by INR 2,630/t m-o-m.

Healthy bookings in sponge iron drove pellet demand, resulting in pellet producers raising their offers.

• Odisha index recovers up to 6% m-o-m: The monthly average of SteelMint’s Odisha index edged up by 5.7% m-o-m to INR 3,480/t ex-mines in July. During the monsoon season, iron ore availability in India remains tight which could be supporting iron ore prices.

An uptick in iron ore prices also lent support to domestic pellet prices.

Outlook

The near-term outlook for domestic pellet prices is most likely to remain positive, SteelMint notes. Lack of availability of iron ore may lead keep prices supported.