India: Raipur mill scale prices hits 2-year low amid weak pellets market

Domestic mill scale prices were assessed at INR 3,000/t exw-Raipur, stable w-o-w. Deals of around 1,000 t were concluded by a central India-based trader at INR 3,000/t exw-Raipur. Another 200 t of trade was also concluded recently at INR 3,000-3,100/t exw-Raipur. Prices have fallen to 2-years low, as per SteelMint's assessment.

However, a few major pellet manufacturers are not actively purchasing mill scale from the market as they are uncertain of the recovery in pellet prices, going ahead.

Why did mill scale prices drop?

• Drop-in pellet prices: Domestic mill scale prices decreased further owing to the drop in pellet prices. SteelMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, stood at INR 7,650/tonne (t) DAP Raipur on 17 June 2022, down by around INR 250/t compared to the last assessment on 14 June.
  
  

Offers and price indications in Barbil have fallen by INR 250/t compared to the beginning of this week. The index has fallen by around INR 2,500/t in a month's time.

• Merchant pellet producers see weak demand ahead: Merchant pellet producers continued to see weak demand ahead after the Indian government imposed a steep 45% export duty on iron ore pellets. Pellet production in FY2021-22 (FY2022) was around 77 mnt. The industry's capacity utilization level is 70%. On average, out of the total production, 66 mnt is domestically consumed, which leaves 11 mnt for exports. India's total pellet production is expected to increase in FY2023 on the back of ramp-up in capacities and an expected rise in iron ore production. However, the share of merchant pellet production (estimated at around 30-33 mnt) is likely to come down by 10-15% y-o-y.