PELLEX Stable at INR 5,900/WMT in Recent Deals

PELLEX stable at INR 5,900/wmt (DAP Raipur) in recent transactions reported. Pellet deals for around 10,000 MT reported to Raipur market at INR5,800/MT (Ex-plant); normalizing for freight to Raipur at INR 5,950/MT (DAP Raipur).

Gujarat based DRI plants actively book pellets from Raipur at a landed cost of Rs 7,800-7,900/t (delivered Kandla). Gujarat based DRI plants need about 200,000 MT lumps/pellets per month. Imports of lumps remain expensive. Jindal Saw (who is the major supplier of pellets in Gujarat ) is booked for exports.

Raipur based pellet offers stable at INR 5,800/MT( Ex-plant); normalizing for freight to Raipur at INR 5,950/MT (DAP Raipur). Three bids were reported at INR 5,650/MT (DAP Raipur).

No export bookings reported this week. Standard grade pellet price assessment stands at $104-106/t CFR China, equivalent to $91-93/t FoB India. In Central India the export market is semi-liquid, therefore export realization 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.