SteelMint: PELLEX falls on lower bids post-export duty announcement

SteelMint’s bi-weekly domestic pellet (Fe 63%) index, PELLEX, stood at INR 9,000/tonne (t) DAP Raipur on 24 May 2022, down by around INR 1,100/t compared to the last assessment on 20 May. Pellex has fallen to its one-and-a-half year low post-announcement of the export duty of 45% on pellets by the Indian government late last week. In a highly significant development late on 21 May, 2022, the government imposed hefty export duties on steel and steelmaking raw materials and intermediaries in a bid to preserve higher domestic supplies and control rising prices.

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 hence not taken into consideration in this publishing window. And, hence, accorded 0% weightage for T1 trade.
• Eight (08) firm offers, bids and indicative prices were reported. Only five (05) were taken for price calculation and given 100% weightage.
• SteelMint received three bids at around INR 8,150-8,700/t DAP Raipur, and two were considered for calculation of the index.

Many pellet makers have kept their offers on hold and are reviewing the market scenario. Last offers from Godawari Power and Ispat Ltd (GPIL) was assessed at INR 10,300/t exw ($133/t) and other Raipur-based pellet producers were at INR 9,900-10,000/t ($127-129/t) exw.

Jharsuguda producers are out of the market and were silent today.

Buyers are expecting a correction in pellet offers in the next few days. However, NMDC’s price revision will also be announced soon this week. However, both buyers and sellers want more clarity on this and have thus adopted a wait-and-watch mode.

Pellet-based DRI (P-DRI, FeM 80%) prices in Raipur stood at INR 33,000/t exw, down by around INR 1,000/t w-o-w. On a daily basis also, sponge iron prices decreased by around INR 500/t.

Indian pellets market overview:

Most of the buyers across the region are either out of the market or silent on any price offer. They are mostly looking for clarity on export duty and some relief from the Central government. Market participants are depressed over the sudden duty imposed last week and anxious on the future course of action.