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India: PELLEX rises sharply following NMDC's iron ore price increase

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Pellets

BigMint Bureau

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1 Oct 2024, 20:52 IST

India: PELLEX rises sharply following NMDC's iron ore price increase

NMDC hikes iron ore offers by up to INR 300-400/t

Pellet offers in Raipur rise by INR 600-700/t

Sponge iron, billet prices sharply increase w-o-w

BigMint's bi-weekly domestic pellet (Fe63%) index increased by INR 700/t ($8/t) to INR 9,800/t ($117/t) DAP Raipur on 1 October 2024 compared to the last assessment on 27 September. A deal of 78,000 t of pellets was recorded at INR 9,500-9,950/t ($110-119/t) DAP Raipur in this publishing window.

Pellet prices in Raipur increased today because producers raised their offers, following NMDC's hike in its iron ore fines and lumps offers for October delivery by up to INR 300-400/t. On the other hand, sponge and billet prices have also rose sharply w-o-w.

A buyer said: "All prices are skyrocketing in the market. Some traders managed to conclude deals at earlier offers." The recent rise in global iron ore fines prices, which increased by $19/t w-o-w to $108/t CFR China as of 27 September 2024, has significantly supported the rise in domestic pellet offers. This surge is driven by China's latest economic stimulus measures, including a 50 basis point reduction in the reserve requirement ratio. This move by China's central bank is expected to inject approximately 1 trillion yuan ($142.2 billion) of long-term liquidity into the market.

Hike in NMDC's iron ore prices: NMDC has raised the list prices of iron ore calibrated lump ore (CLO) and fines by INR 300/t ($4) and INR 400/t ($5), respectively on Tuesday. The new prices are effective from 1 October. The miner has set the price of DR CLO (10-40mm, Fe 67%) at INR 6,720/t ($80/t) and iron ore fines (-10mm, Fe 64%) at INR 5,010/t ($60/t) on an FOR basis from its Bacheli complex. These prices include royalty, DMF, and NMET charges.

Factors driving PELLEX-

Pellet offers rise in Raipur: Raipur-based manufacturers have recently increased their offers for Fe 63% (+/- 0.5%) pellets by INR 600-700/t ($7-8/t), bringing prices to INR 9,700-9,900/t ($116-118/t) exw-Raipur. Additionally, landed prices from other regions for Raipur have also risen significantly following the OMC auction and the increase in global prices.

Sponge iron prices climb by INR 1,600/t w-o-w: P-DRI prices rose by INR 1,600/t ($19/t) w-o-w to INR 28,100/t ($335/t) exw Raipur on 1 October. Meanwhile, d-o-d, prices increased by INR 200/t ($2/t). Active deals at recent offers have supported the sponge price.

Billet prices rise by INR 1,500/t w-o-w: Billet prices in Raipur have decreased by INR 1,500/t ($18/t) w-o-w to INR 41,100/t ($490/t) exw today, while they rose 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.

Five (5) deals were reported so far in this publishing window all were taken into account for price calculation and accorded a 50% weightage for T1 trade.

Twelve (12) firm offers, bids, and indicative prices were heard. Ten (10) were taken for price calculation and given the balance 50% weightage.

Outlook

Pellet prices in Raipur are anticipated to remain bullish due to the increase in NMDC's iron ore prices and a rise in global offers. Additionally, the surge in sponge iron and billet prices is likely to provide further support to pellet prices.