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India: Domestic pellet trade volumes rise by 8% m-o-m in May'24

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Pellets

BigMint Bureau

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14 Jun 2024, 18:17 IST

India: Domestic pellet trade volumes rise by 8% m-o-m in May'24

Pellet trade volumes in the domestic market rose by 8% m-o-m to 873,700 tonnes (t) in May 2024 compared to 808,250 t in April 2024, according to data maintained with BigMint. Supportive market sentiment from finished steel has supported the pellet demand in the domestic market.

Meanwhile, NMDC had increased list prices of iron ore fines and calibrated lump ore today by INR 250/t ($3/t) and INR 350/t ($4/t) respectively, BigMint learnt from reliable sources. The miner has fixed prices of DR CLO (10-40mm, Fe67%) at INR 7,520/t ($90/t) and of iron ore fines (-10mm, Fe64%) at INR 5,610/t ($67/t) on FoR basis from its Bacheli complex. Prices include royalty, DMF and NMET charges.

Factors driving up domestic pellet trade volumes:

Pre-monsoon restocking-In May, buyers focused on restocking before the monsoon to ensure an uninterrupted raw material supply. Iron ore availability typically becomes challenging during the monsoon due to potential disruptions in mining operations.

NMDC's operation slowdown: The labour slowdown at NMDC last month disrupted iron ore supply by about 50%. In May 2024, NMDC saw a 37% drop in output compared to 488 rakes (1.87 mnt) recorded in April, according to BigMint data. This led to increased pellet buying for pre-monsoon restocking. However, regular operations have now resumed across all facilities, with material transportation stabilising.

Fall in export Prices: BigMint's India pellet (Fe 63%, 3% Al) export (FOB east coast) index dropped to $96/t in May 2024, from $107/t in April 2024. The international seaborne market for Indian pellets remained sluggish due to limited trading activity and Chinese steelmakers facing profit margin challenges, leading to reduced demand for pellets. Additionally, high pellet inventory levels at ports further contributed to the subdued market sentiment.

Pellex Overview: The monthly average of BigMint's domestic pellet index, PELLEX, was assessed at INR 10,800/t, up by INR 250/t m-o-m as compared to April. Pellex prices rose amid hike in NMDC's price , OMC's bids and pre monsoon demand in the market.

Outlook: Pellet trade volume is expected to be volatile in the coming month due to the monsoon, but sustained demand in the domestic market is anticipated.