SteelMint: PELLEX drops to 5-month low on recent price cuts

SteelMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, stood at INR 10,100/tonne (t) DAP Raipur on 20 May 2022, down by around INR 300/t compared to the last assessment on 17 May. Pellex has fallen to more than five months' low as it was last seen at this level in early December 2021. Around 40,000 t of pellet deals were reported in this publishing window. However, only 10,000 t of deals were considered for calculations.

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.
  
  
• Three deals were reported but only one deal was taken into consideration in this publishing window. And, hence, accorded 50% weightage for T1 trade.
  
  
• Ten (9) firm offers, bids and indicative prices were reported. Only eight (08) were taken for price calculation and given 50% weightage.
  
  
• SteelMint received two bids at around INR 10,150/t DAP Raipur, and both were considered for calculation of the index.
  
  

Godawari Power and Ispat Ltd. (GPIL) has decreased pellet offers for domestic buyers by INR 800/t ($10/t) to INR 10,300/t exw ($133/t) from INR 11,100/t ($1/t). Meanwhile, other Raipur-based pellet producers also cut offers by INR 800/t ($10/t) to INR 9,900-10,000/t ($127-129/t) exw.

Jharsuguda producers also cut pellet offers to around INR 9,100/t exw, down by INR 400/t compared to last week.

Buyers have now started showing interest in pellets post price cuts by the Raipur-based pellet makers. The decline in sponge iron prices , drop in pellet export realization and weak response in the OMC auction led to the price fall.

Odisha Mining Corporation (OMC) had scheduled an iron ore fines auction on 19 May, 2022 in which out of a total of 1.23 mn t of material, bids were received for 936,000 t (76%). The bid prices in the auction fell up to INR 1,650/t against last month's bid price. Earlier miners also cut by up to INR 800/t the base price for the 19 May auction.

Pellet-based DRI (P-DRI, FeM 80%) prices in Raipur stood at INR 34,300/t exw, down by around INR 400/t w-o-w. However, on a daily basis, sponge iron prices increased by around INR 400/t.

Indian pellets market overview:

Domestic pellet prices dropped across key regions.

• Iron ore pellet (Fe 63%) prices in Bellary inched down to INR 9,900/t exw today as against INR 10,000/t on 17 May, as per SteelMint assessment.Confirmed deals for 40,000 t were recorded in this publishing window at around INR 10,150-10,300/t exw.
  
  

Region-wise offers and deals: