SteelMint: PELLEX up by INR 100/t in recent deal

SteelMint’s bi-weekly domestic pellet index “PELLEX” increased by around INR 100/t today (27th Oct’20) to INR 9,050/t, DAP Raipur in recent deals. Deal for 5,000 t pellet has been concluded by a Raipur based seller in this publishing window.

Few Raipur based pellet makers have taken maintenance shut down for the next 15-20 days. As per the sources, Godawari Ispat Ltd. has taken maintenance shut down for 1.2 mn t capacity.

According to the market participants, maintenance shut down by few pellet makers and surge in P-DRI prices may result in further hike in Raipur pellet offers.

Pellet sponge (P-DRI) prices have increased sharply in the last one week by around INR 1,600-1,700/t w-o-w to INR 21,600-21,800/t exw, Raipur today against INR 20,000-20100/t a week ago. However, on a daily basis sponge prices have increased by INR 500/t. In the current week pellet sponge prices have increased around 700-800/t.

Market overview-: Pellet prices in other regions like Jamshedpur and Bellary have also been increased by INR 600-700/t w-o-w amid hike in sponge offers.

Rationale – 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.

• Deals for 5,000 t pellets have been concluded by Raipur based pellet maker in this publishing window at INR 8,950-9,050/t (DAP Raipur). These transactions were taken into consideration for price calculation and weightage given 80%.
• Three firm offers were reported this week at INR 9,050-9,250/t (DAP, Raipur) and the rest three from outside Raipur at INR 8,900-9,250/t (DAP, Raipur) which have been given a weightage of 20%.
• No firm bid has been reported in this publishing window, and given a weightage of 0%.
• 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 7,800/t and given a weightage of 0%.
• 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: