India: PELLEX Up Marginally Amid Recent Trades

PELLEX increased marginally to INR 6,100/WMT (DAP Raipur) amid active domestic buying and decent trades. Three deals were reported in Raipur market in this publication window (with the total traded quantity of 25,000 MT) One Raipur based pellet maker concluded a deal of 10,000 MT at INR 6,000/MT (Ex-plant); normalizing for freight to Raipur at INR 6,150 (DAP Raipur).

Another Raipur based pellet maker concluded a deal of 5,000 MT at INR 5,950/MT (Ex-plant); normalizing for freight to Raipur at INR 6,100 (DAP Raipur). Another deal of 10,000 MT was concluded from Raipur to Chandrapur at INR 5,850/MT (Ex-plant).

Raipur based plants' have kept their offers unchanged at INR 6,000/MT(Ex-plant); normalizing for freight to Raipur at INR 6,150/MT (DAP Raipur).

Two firm bids were reported in the range at INR 5,750 and 5,950 (DAP Raipur). SteelMint P-DRI assessment (Sept 10, 2019) at INR 16,400/MT (Ex-Raipur) against INR 15,850/MT (Ex-Raipur) a week before. Yesterday Raipur based sponge manufacturers sold over 10,000 MT P-DRI at INR 16,200-16,400/MT (Ex-plant).

No export deal was reported in this publishing window. Exports indications stand at around USD 92/MT, FoB India. Since the export market is illiquid, the export realization factor has been ignored in the computation of PELLEX.

Since iron ore movement from NMDC and Odisha has slowed amid monsoons, Substitute parity factor has been ignored in the computation of PELLEX.

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.