SteelMint: PELLEX edges up by INR 50/t, market awaits OMC auction outcome

SteelMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, inched up by INR 50/tonne (t) to INR 9,700/t DAP Raipur on 17 November, 2023 compared to the last assessment on 14 November. No deal was recorded in this publishing window.

Decent bookings were done by buyers before the price hike in Raipur. Therefore, they are less interested in bookings at prevailing offers. Perhaps buyers remained on the sidelines in the festive season and no significant market activity was recorded so far this week. In addition, a few bookings for exports were concluded recently which kept offers supported.

On the other hand, market participants are waiting for NMDC's price revision, which is around the corner and OMC's iron ore auction which is scheduled for 18 November. It is assumed that more clarity is expected post this auction relating to prices.

OMC has scheduled an auction for 2.9 million tonnes (mnt) of iron ore (2.07 mnt of fines and 0.85 mnt of lumps) on 18 November. The miner has kept base prices unchanged for the upcoming auction for almost all lots, except one in lumps.

Rationale:

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology Click here.
  
  
• No deals were reported so far this week and not taken into account for price calculation and accorded 0% weightage for T1 trade.
  
  
• Ten (10) firm offers, bids, and indicative prices were heard. Six (6) were taken for price calculation and given the balance 100% weightage.
  
  

Factors supporting pellet prices:

• Pellet export index rises to 1.5-year high: SteelMint's India pellet (Fe 63%, 3% Al) export (FOB east coast) index increased by $3/t w-o-w to $128/t on 15 November, 2023. The pellet export index has increased to 1.5-year high, as it was last seen at this rate in May, 2022. The Indian pellet export market remained optimistic this week. Few pellet producers preferred to sell material in export market as domestic trade activities remained sluggish amid festivals.
  
  
• Sponge PDRI prices edge up w-o-w: SteelMint's price assessment for sponge P-DRI (FeM 80%) in Raipur increased marginally w-o-w by INR 50/t to INR 27,600/t exw on 17 November. However, lack of spot buying activity, combined with fluctuating steel prices, contributed to the drop in sponge iron prices on a d-o-d basis. Prices decreased by INR 100/t d-o-d.
  
  
• Raipur billet prices inch up d-o-d: Billet prices in Raipur inched up d-o-d by INR 50/t to INR 41,500/t exw. The index stood up due to firm resistance by sellers as they increased their price offerings. However, prices witnessed a marginal drop of INR 50/t, w-o-w.
  
  

Outlook

Pellet prices are expected to remain firm amid export bookings from India. However, upcoming OMC auction may give clarity post-auctions.