SteelMint: PELLEX declines marginally in the absence of trading

SteelMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, fell marginally by INR 50/t to INR 14,500/t DAP Raipur on 10 Aug'21. No deal was heard in this publishing window. Current offers from Raipur-based pellet producers are at INR 14,200-14,500/t exw, SteelMint learnt from sources.

Jharsuguda- and Raigarh-based producers have decreased offers further by around INR 200-400/t to INR 14,100 and 14,300/t exw, respectively.

Buyers seem to have taken a cautious stance and are waiting for correction in prices before taking any purchase decisions.

The decline in pellet export realisations may result in weakening of domestic offers, a buyer said. SteelMint also received a single bid at INR 13,500/t exw-Raipur but it was not considered for index calculation as per methodology.

SteelMint's benchmark pellet sponge (P-DRI, FeM 80%) prices rose by INR 200/t w-o-w to INR 31,000/t exw,Raipur on 10 Aug. However, on a daily basis, P-DRI prices were stable. Material dispatch positions remained tight at a majority of plants, which continued to support sponge prices despite falling billet prices today.

Indian pellet market overview-:

SteelMint's assessment for Bellary iron ore pellet (Fe 63%) stands at INR 12,850/t exw, down compared to the last assessment on 6 Aug at INR 13,000/t.

On the other hand, prices remained stable in Durgapur and Barbil.

Rationale:

• PELLEX has been derived using data points: i.e., trades, offers and bids. You can download the detailed methodology by clicking on this link Click here.
  
  
• No deal was reported in this publishing window and hence not considered as T1 for index calculation, being given 0% weightage.
  
  
• Eleven (11) firm offers and indicative prices were reported. Five were from Raipur and the rest from outside the state capital. Six were taken for price calculation and given a weightage of 100%.
  
  
• SteelMint received a single bid at INR 13,500/t exw but it did not qualify for the calculation of the index.
  
  

Outlook: Pellet prices are most likely to come under pressure following sluggish domestic trade and falling export realisations. Most of the export bookings had been scheduled for Jul/Aug and, perhaps, the market participants will try to push more volumes into the domestic market in Aug on falling global prices.

Region-wise pellet offers and deals: