SteelMint’s bi-weekly domestic pellet index “PELLEX” has moved down marginally by INR 50/t on Tuesday (15th Sept’20) to INR 9,050/t DAP Raipur amid lack of trades. Domestic pellet supply is expected to improve as one pellet maker in Raipur which was under maintenance shutdown has resumed production.
However, pellet sponge prices moved up slightly on improved semi-finished demand and stood at INR 19,200/t exw-Raipur. However, on weekly basis, prices are still lower by INR 1,000/t against INR 20,200/t a week before.
Raw material shortage continues to remain a concern as iron ore offers increased further. Towards the end of last week, Essel mining increased iron ore offers around INR 300/t in fines. In yesterday’s auction conducted by SAIL from its Odisha mines, the entire quantity (200,000 t) put up for auction was booked at INR 2,940-2,950/t, loaded to wagons, taxes extra.
PELLEX has been derived using five data points: i.e trades, offers, bids, substitute parity, and export realizations. You can download the detailed methodology by clicking on this link Click here
Assigning weightage to data points:
- One deal concluded for outside Raipur market for around 1,000 t at INR 9,150/t (DAP, Raipur) in this publishing window. This was not considered for price calculation owing to less quantity.
- Four firm offers were reported this week at INR 8,950-9,200/t (DAP, Raipur) and the rest three from outside Raipur at INR 9,250/t (DAP, Raipur) which have been given a weightage of 50%.
- Three firm bids have been reported for the price calculation at INR 8,650-9,150/t DAP, Raipur in this publishing window, and given a weightage of 50%.
- SteelMint calculated the price at which Raipur pellet can displace NMDC lump in the sponge rotary kiln feed (substitute parity) on a DAP Raipur basis at INR 7,300/t and given a weightage of 0%. As the rake movement has slowed down due to monsoons and has decreased to 12 rakes (between 1st to 10 Sept’20) against 17 rakes of last month in the same timeframe, not considered for price calculation.
- The export realization factor has not been considered as pellet makers are less active in exports owing to an increased domestic realization.
Calculation of Index:
Source-: SteelMint
Region-wise pellet deals and offers:
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