Inactive Trades & Fluctuating Steel Prices Keep PELLEX Unchanged

PELLEX continues to remain unchanged at INR 6,250/MT due to inactive pellet market and sudden fluctuations in steel prices.

Raipur based plants' had increased their offers by INR 200/MT from Wednesday onwards to INR 6,400/MT(Ex-plant); normalizing for freight to Raipur at INR 6,550/MT (DAP Raipur).

Pellet export realization for standard grade pellet has come down to USD 100/DMT FoB (Al 3%); due to declining iron ore prices in China and falling bids from China. Chinese steel mills are preferring iron ore lumps over pellets.

NMDC has rolled over iron ore prices for August. NMDC iron ore production from C.G mines fell by 31% to 1.16 MnT in July'19 as against June at 1.67 MnT.

One firm bid is reported at INR 6,150 (DAP Raipur); few bids reported at INR 5,950/ MT (DAP Raipur) and the same have been excluded from the assessment. Buyers are waiting for further fall in pellet price for substantial buying interest.

Why PELLEX? India has installed pellet capaci1ty of 85 MnT pa and an annual production of around 65-66 MnT. 5 major states - Odisha (28.9 MnT), Karnataka (19.5 MnT), Chhattisgarh (9.6 MnT), Jharkhand (8.4 MnT) and Andhra Pradesh (8 MnT) - covers around 85-90% of the capacity. Based on the above we have chosen Raipur as our index base as this market seems more active from a domestic merchant trading perspective along with exports. Also, Chhattisgarh has a good base for sponge iron makers (DRI) who procure a decent amount of pellets.

These factors have led SteelMint to launch this index of PELLET on DAP Raipur basis.
The proposed specifications, along with delivery terms were devised following consultation with market participants. They are as follows:
1. Fe Content - Fe 63-64%
2. Combined Silica & Alumina - 7%
3. Trade Size - 2,500-10,000 MT
4. Payment terms - Advance

SteelMint will continue to monitor changes in the pellet markets and will adjust its methodology in accordance with the market participants.

To provide feedback/suggestions, please contact info@steelmint.com

Click here to see SteelMint Pricing Methodology and Rationale documents.