SteelMint: PELLEX falls further on declining sponge prices, bid-offer disparity

SteelMint’s bi-weekly domestic pellet (Fe 63%) index, PELLEX, fell by another INR 200/t to INR 11,450/t DAP Raipur on 16 Nov’21. No deals were reported in this publishing window due to bid-offer disparities.

However, market participants expect offers to fall further in the short term.

Central India-based pellet makers kept their offers stable today, sources informed SteelMint. Current offers for pellet (Fe 63%) stand at INR 11,650-12,000/t exw-Raipur.

Sellers in Odisha’s Jharsuguda have reduced offers further by around INR 200-300/t. However, trades remain subdued.

No deal was heard for the last 10 days in the Raipur market owing to sluggish demand and falling steel prices. However, buyers are still not showing any interest and there is high disparity between bids and offers in the market.

As per sources, buyers are exploring options to purchase from nearby markets too.

SteelMint’s assessment for sponge iron, P-DRI (FeM 80%), in Raipur fell by INR 1,600/t to INR 29,200/t exw on a w-o-w basis. However, during today’s trade prices were fell to INR 28,800/t exw but later in the evening prices have increased around INR 400/t to INR 29,200/t.

Indian pellet market overview: Pellet markets across regions witnessed a sharp drop in prices by around INR 250-1,200/t on falling sponge iron prices. Iron ore pellet (Fe 63%) prices in Bellary have fallen to INR 11,300/t exw compared to INR 11,500-11,600/t on 12 Nov. Deals for around 17,000 t were heard at INR 11,300/t exw.

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.
• No deal was reported in this publishing window hence not considered as T1 trade for calculation of the index; accorded no weightage.
• Eleven (11) firm offers and indicative prices were reported. Seven (07) were taken for price calculation and given 100% weightage.
• SteelMint received two bids in a falling market which qualified for calculation of the index.

Region-wise pellet offers and deals: