SteelMint: Pellet index sees 32% rise in Sep'21 trade volumes

SteelMint's biweekly pellet (6-20mm, Fe 63%) index for the key central Indian market of Raipur, PELLEX, witnessed total transactions of 164,500 t in Sep'21 compared to 125,000 t in Jun - an increase of over 32% on the month, as per monthly data compiled by SteelMint.

Total traded volumes for the month increased significantly versus 71,000 t in Jul and just about 30,000 t in Jun. However, despite a surge in trades witnessed in Sep, pellet prices remained subdued on low bids and buying interest amidst declining pellet export prices.

The country's leading PSU iron ore miner, NMDC, had cut prices in the range of INR 1,000-1060/t for Sep and falling raw material prices kept pellet prices under pressure.

Late surge in prices

Trading hit a slow track as sellers in Raipur held offers steady almost throughout the month in the INR 11,300-11,700/t range. Cheaper landed prices from Odisha and West Bengal put further pressure on prices. Bids drifted lower than offers on competitive prices from neighbouring markets.

SteelMint calculated the weighted average pellet price on DAP Raipur basis at INR 11,283/t for Sep - a decrease of 17% compared to the average price in Aug.

Nevertheless, pellet prices recovered by around INR 1,400/t and shot up to INR 12,300/t DAP Raipur on 1 Oct on fast-improving prices of pellet sponge iron (P-DRI) in the Raipur market and increase in steel billet prices, with recovering sentiments in the semi-finished steel market.

SteelMint assessed P-DRI prices at INR 34,200/t exw-Raipur on 4 Oct - a hike of INR 3,700/t on a w-o-w basis, mainly on the astonishing rally in coke and coal prices. Likewise, data shows that SteelMint's daily IF steel billet index for Raipur (assessed on 4 Oct) increased by INR 4,300/t, w-o-w, on rising finished long steel prices.

Importantly, India's pellet export prices for Fe 64% material inched up $22/t, w-o-w, towards end-Sep following the recovery in global iron ore prices which had slumped below the psychological $100/t for benchmark Fe 62% fines on CNF China basis.

SteelMint had reported that during the short spell when global prices had been falling sharply some market participants had even toyed with the idea of importing lump ore of South African origin.

But the renewed interest observed at OMC's iron ore lump auction on 1 Oct, with bid prices being recorded around INR 3,700/t higher than the set base price, happened to support pellet prices. However, importantly, bid prices at the 1 Oct auction for lump ore were still around INR 400/t lower compared to the base price for lumps at OMC's 31 Aug auction.

Outlook

Both state-owned and private steel mills have increased long steel prices for deliveries to be done in Oct and semi-finished prices, likewise, are expected to remain supported. Notably, NMDC has reduced prices for Oct, but in the range of INR 190-400/t, with decrease in iron ore lump prices just about INR 190/t.

As the extended monsoon season slowly recedes, thereby providing a fillip to steel prices, it is expected that pellet prices in Raipur are to set to rise in the coming days. In fact, SteelMint has already reported offers breaching the INR 13,000/t level. Prices, expectedly, could climb higher in Oct.