SteelMint: PELLEX up marginally in recent trades

SteelMint’s bi-weekly domestic pellet index “PELLEX” inched up by around INR 50/t today (09th Oct’20) to INR 8,450/t, DAP Raipur. Deals for 40,000 t pellets have been concluded by Raipur based pellet makers in this publishing window. This week, around 100,000 t pellets have been traded in Raipur market.

One of the Raipur based major pellet makers increased offer by around INR 100/t to INR 8,300-8,400/t exw against the last offer of INR 8,200-8,300/t. According to market sources, one of the pellet makers in Raipur has taken maintenance shut down for the next 10-15 days. Trade sources expect prices to remain supported due to tight supply.

National Mineral Development Corporation (NMDC) has increased iron ore prices by INR 200-240/t for Oct’20 deliveries. Baila lump and fines have been increased by INR 200/t and that of DR CLO by INR 240/t. Domestic iron ore prices in India have rallied on limited merchant availability and the expected hike in pellet offers in the upcoming days.

Pellet sponge (P-DRI) prices have increased by around INR 500/t w-o-w to INR 19,300/t exw, Raipur against INR 18,800/t a week ago. However, on a daily basis sponge prices remained unchanged.

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 40,000 t pellets have been concluded by Raipur based pellet makers in this publishing window at INR 8,400-8,450/t (DAP Raipur). The transaction was taken into consideration for price calculation and given weightage given 80%.
• Four firm offers were reported this week at INR 8,450-8,550/t (DAP, Raipur) and the rest three from outside Raipur at INR 8,400-8,550/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 7,600/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: