PELLEX Firm Amid Dull Market Sentiments

PELLEX Stable at INR 5,950/wmt(DAP Raipur) amid weak market sentiments. One deal for 2,000 MT was reported in this publishing window from Raipur at INR 6,150/MT (DAP Raipur). However, the same has been ignored for the PELLEX assessment (as per SteelMint methodology).

Raipur based pellet makers have kept pellet offers stable at INR 6,000/MT( Ex-plant); normalizing for freight to Raipur at INR 6,150/MT (DAP Raipur). Raigarh based pellet maker is offering pellet at INR 5,600/MT(Ex-plant).

One pellet export tender of KIOCL concluded today for Fe 64% grade and, 2% Al at around USD 100/MT, FoB India. Although the Chinese steel market seems to remain silent over ongoing National holidays. Export Indication at USD 93-94 for regular grade pellet Fe 63% (3% Al). In Central India export market is illiquid, therefore export realization factor has been ignored in the computation of PELLEX.

Considering the land cost of Lump and other factors like yield, conversion cost etc for NMDC and Orissa; the substitute parity price for Pellet is INR 5,650 (DAP Raipur).

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.