India: PELLEX rises by INR 450/t ($6/t) post-NMDC's iron ore price hike

• NMDC hikes iron ore offers by up to INR 350/t
  
  
• Pellet offers in Raipur rise by INR 800/t
  
  
• NMDC's mine operation, dispatch return to normalcy
  
  

BigMint's bi-weekly domestic pellet (Fe63%) index increased by INR 450/t ($6/t) to INR 11,000/t ($133/t) DAP Raipur on 28 May, 2024 compared to the last assessment on 24 May. A deal of 5,000 t of pellets was recorded at around INR 11,150/t ($134/t) DAP Raipur in this publishing window. Another deal of 30,000 t higher grade raw pellet (Fe66%) was recorded at INR 12,850/t ($154/t) DAP Raipur a couple of days back.

Hike in pellet offers - GPIL has increased pellet offers of Fe 63.5% and Fe 66% by INR 800/t ($10/t) to INR 12,000/t ($144/t) and INR 13,500/t ($162/t) exw-Raipur respectively today. Other producers have raised prices by INR 800-900/t ($10-11/t) to *INR 11,400-11,500/t ($137-138/t)* exw after the NMDC iron ore prices hike.

However, few Odisha-based pellet producers offered raw pellets at the landed prices of INR 10,200-400/t (124-126/t) in Raipur.

Pellet prices in Raipur increased today as pellet producers raised their offers, following NMDC's hike in its iron ore fines and lumps offers for June delivery up to INR 350/t. On the other hand, buyers are cautious for any pellet as sponge prices have fallen by INR 1,000/t however d-o-d it has fallen by INR 200/t.

In the recent news, the slowdown by NMDC workers has been resolved following successful negotiations addressing their demands for a wage hike. The mining company's management held several meetings with the unions to resolve the wage conflicts. Consequently, normal operations have resumed across all units, and material dispatch via rake movement has restarted, ensuring the continuation of essential supplies. Yesterday, the miners dispatched 17 rakes of iron ore from Bailadila hills and 5 from Karnataka as per previous normal days.

A buyer said: "The Raipur pellet producer significantly increased the pellet offers today after the NMDC iron ore prices revision. However, it will be interesting to see the market approach for buying at higher offers while the sponge and finished steel market saw an INR 500-1,000/t ($6-12/t) drop in the offers over the last week. However, steelmakers may look for Odisha-based material again as the neighbouring region landed prices will be INR 800-1,000/t ($10-12/t) cheaper against the local prices."

However, the optimistic iron ore prices in the central-eastern region had encouraged Raipur-based pellet producers to raise their offers.

Hike in NMDC's iron ore prices - 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 company's effective prices are effective from 28 May 2024. 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.

Steel market updates

• Sponge P-DRI prices fall w-o-w: PDRI prices dropped by INR 1,000/t ($12/t) to INR 28,200/t ($339/t) exw on 28 May. Meanwhile, prices fell by INR 200/t ($2.5/t) d-o-d. Prices have dropped by INR 100-400/tonne (t) across regions due to selling pressure and weakened market sentiments. However, buying activity has surged as buyers took advantage of the current market conditions.
  
  
• Billet prices drop w-o-w: Billet prices in Raipur decreased today by INR 350/t ($4/t) w-o-w to INR 44,200/t ($530/t) exw, while prices increased by INR 100/t ($1/t) d-o-d.
  
  

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology Click here.
  
  
• One (1) deal was reported so far in this publishing window and was taken into account for price calculation and accorded a 50% weightage for T1 trade.
  
  
• Eighteen (18) firm offers, bids, and indicative prices were heard. Thirteen (13) were taken for price calculation and given the balance 50% weightage.
  
  

Outlook

Pellet prices in Raipur are expected to remain volatile as iron ore prices have increased. Meanwhile, sponge iron and finished steel prices have dropped. However, following the buyers buying interest before monsoon may support prices in the coming days.

*Correction: The Raipur local pellet offers have been updated which was earlier mentioned INR 10,800-10,900/t ($130-131/t) exw.