India: PELLEX increases by INR 250/t post-NMDC price revision

• NMDC hikes fines prices by INR 400/t
  
  
• Trades with the existing offers
  
  

SteelMint's bi-weekly domestic pellet (Fe 63%) index, increased by INR 250/t to INR 9,850/t DAP Raipur on 25 January 2024 compared to the last assessment on 23 January 2024. Deals of 40,000 t were recorded at INR 9,550-9,950/t DAP in this publishing window.

The pellet makers from Raipur raised offers after iron ore offers increased by NMDC, Chhattisgarh. However, last week the pellet offers were reduced by INR 500/t in the twice price cuts.

According to market participants, "Buyers booking material just on need basis and cautious for bulk deals against the sponge and finished steel market on a downtrend while pellet prices increased again."

A buyer said: "Few deals were recorded in Raipur in the last couple of days. The pellet prices increased again in the region which may prevent buyers from booking new material in the near term. However, neighbouring region pellet offers were also expensive for local buyers at delivered prices."

NMDC increased prices of DR-CLO by INR 300/tonne (t) and fines by INR 400/t, effective 24 January 2024. The miner fixed prices of DR CLO (10-40mm, Fe67%) at INR 7,220/t and those of iron ore fines (-10mm, Fe64%) at INR 5,310/t (on FoR basis from Bacheli complex). Prices include royalty, DMF, and NMET charges.

The conversion spread from sponge iron (PDRI) to billets for the standalone furnaces in the region was recorded at INR 13,050/t and received a slight drop this week. However, few market observers expect spread may increase in the near term.

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodologyClick here.
  
  
• Two (2) deals have been reported so far this week, and one was taken into account for price calculation and accorded 50% weightage for T1 trade.
  
  
• Twelve (12) firm offers, bids, and indicative prices were heard. Seven (7) were taken for price calculation and given the balance 50% weightage.
  
  

Market highlights

• Raipur pellet offers rise: Godawari Power and Ispat Ltd (GPIL) pellet (Fe 63% +/-0.5) offers increased by INR 300/t ($4/t) to INR 10,100/t ($122/t) exw-Raipur today. The major pellet players increased the raw pellets offers by INR 300/t ($4/t) to INR 9,400-9,500/t ($113-114/t) exw yesterday. Notably, last week the Raipur pellet makers reduced the price twice following the buyers' mood.
  
  
• P-DRI prices in Raipur stable w-o-w: SteelMint's P-DRI (FeM 80%) prices remained largely stable d-o-d to INR 26,350/t exw on 25 January. Similarly, the assessment for the sponge in Raipur remained stable w-o-w today. Sponge iron prices in India experienced a slight decrease, ranging from INR 100 - 150/t d-o-d in the major regions. Today buying activity in the semi-finished segment improved on downward sentiments.. The neighbouring region material was available INR at 300-400/t less than the local prices.
  
  
• Billet prices in Raipur drop w-o-w: Billet prices in Raipur fell w-o-w by INR 350/t to INR 39,400/t exw on 25 January. The prices remained stable w-o-w. Participants in the market are anticipating a rise in semi-finished prices, possibly influenced by the increase in raw material prices by NMDC, which also contributed to increased buying demand in sponge iron throughout the day.
  
  

Outlook

The pellet market is expected to remain supported in the coming days after increased raw material prices in the regions.