SteelMint: PELLEX falls INR 100/t on lack of firm bids, falling sponge iron prices

SteelMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, stands at INR 12,150/tonne (t) DAP Raipur on 15 Feb'22, down INR 100/t against the last assessment on 8 Feb. No confirmed deal was heard in this publishing window.

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 and hence not taken into consideration in this publishing window, and therefore accorded no weightage.
  
  
• Eight (08) firm offers, bids and indicative prices were reported. Two (02) were taken for price calculation and given 100% weightage.
  
  
• SteelMint received single bid but not qualified for the index calculation.
  
  

Pellet-makers in Raipur kept offers stable at INR 12,500-12,600/t exw. However, only a few producers are offering in central India as some have either taken maintenance breaks or may offer next week owing to the lack of material availability.

A Jharsuguda, Odisha-based pellet producer is not offering in the market as it has taken a maintenance shutdown which will last a few more days.

Sponge iron players revealed to SteelMint that they have sufficient stocks and some of them have shifted to using NMDC's DR CLO and iron ore lump as interest at current high pellet offers seems to be low. Also, bid-offer disparity has resulted in weak demand.

Coal offers at ports are still very high and, at the same time, falling sponge iron prices has resulted in weak demand in the merchant market. In a confirmed deal, 2,000 t of South African RB2 (5500 NAR) coal was sold at INR 16,000/t at Vizag port, while no major deals were reported at Gangavaram due to lack of available stocks.

Pellet-based DRI (P-DRI, FeM 80%) prices in Raipur dropped INR 500/t w-o-w to INR 33,800/t exw compared to last week's offers. However, on a daily basis, prices have inched up INR 100/t.

Globally, iron ore prices have fallen sharply after steep a decline in futures prices. The Chinese iron ore (Fe 62%) spot market also decreased sharply today by around $13-14/t, which may weigh on India's pellet export prices.

China's state planner NDRC will hold a meeting with various stakeholders in the iron ore industry on 17 Feb'22 to discuss measures to crack down on speculation to control soaring iron ore prices.

Indian pellet market overview: Domestic pellet prices remained stable today across regions except Durgapur and Jamshedpur.

Iron ore pellet (Fe 63%) prices in Bellary remain range-bound at INR 10,250/t exw today, as per SteelMint assessment. Confirmed deals for 4,000 t were recorded in this publishing window at around INR 10,200- 10,400/t exw.

Region-wise pellet offers and deals: