SteelMint: PELLEX drops by INR 200/t on limited trade, further drop likely

SteelMint’s bi-weekly domestic pellet (Fe 63%) index, PELLEX, stood at INR 8,000/tonne (t) DAP Raipur on 10 June 2022, down by around INR 200/t compared to the last assessment on 7 June. Around 5,000 t pellet (Fe 62/63) deal heard in this publishing window at INR 7,650/t DAP Raipur.  The index is seen hovering close to two-years low.

Rationale:

• PELLEX has been derived using data points: i.e. trades, offers and bids. You can download the detailed methodology by clicking on this link Click here.
• One deal was reported for 5,000 t and taken into consideration after adjustment in this publishing window and hence accorded 50% weightage for T1 trade.
• Fourteen (14) firm offers, bids and indicative prices were reported. Around nine (09) were taken for price calculation and given 50% weightage.
• SteelMint received three bids at around INR 7,650-7,950/t DAP Raipur, and two were considered for calculation of the index.

Raipur based pellet makers kept the offers stable at INR 8,000- 8,300/t exw ($103-107/t). However, one of the major pellet makers offers for Fe 62/63% pellets to INR 7,800/t ($100/t).

A Jharsuguda-based pellet maker also dropped its pellet offers by INR 200-300/t to INR 7,200-7,500/t exw compared to its last offer.

Meanwhile, State PSU miner OMC has scheduled an iron ore auction for 17 June’22. Around 1.187 mnt of lump ore and 1.52 mnt of iron ore fines will be put up for auction. The base price of the auction is yet to be disclosed. Buyers are eagerly waiting for the OMC auction for further market clarity. Buyers are also expecting pellet offers to come down in the near short term.

SteelMint also learned from market participants that Chandrapur, Maharashtra-based miner has also cut the iron ore offers post NMDC price cut. Now they are offering lumps (5-18 mm, Fe 63) at around INR 7,000/t FOR Raipur.

Pellet-based DRI (P-DRI, FeM 80%) prices in Raipur stood at INR 30,500/t exw, down INR 800/t w-o-w. However, on a daily basis, sponge iron prices increased by around INR 100/t.

Indian pellets market overview:

Indian pellet-making regions across the country given mixed response in this publishing window. However, demand and the markets are still sluggish.

• Pellet (Fe 63%) prices in Durgapur decreased by INR 500/t today to INR 7,000/t exw compared to the last assessment of INR 7,500/t on 7 June. Also, deals of around 3,000 t were concluded by a Durgapur-based player at INR 7,000/t exw in the present assessment period.
• Iron ore pellet (Fe 63%) prices in Bellary, Karnataka remained range-bound at INR 8,900/t exw today, as per SteelMint assessment.

Regional offers and pellet deals: