SteelMint: PELLEX falls INR 250/t on limited trades in falling market

SteelMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, stood at INR 8,750/tonne (t) DAP Raipur on 27 May 2022, down by around INR 250/t compared to the last assessment on 24 May. With the decline in sponge iron and steel prices, pellet buying activity remained limited.

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.
  
  
• One deal was reported for 10,000 t hence taken into consideration in this publishing window and accorded 50% weightage for T1 trade.
  
  
• Six (06) firm offers, bids and indicative prices were reported. Only three (03) were taken for price calculation and given 50% weightage.
  
  
• SteelMint received two bids at around INR 8,500-8,700/t DAP Raipur, and both were considered for the calculation of the index.
  
  

India's pellet export market has turned silent after the announcement of the steep export duty. The Indian government has recently imposed a steep 45% export duty on iron ore pellets from none previously. With exports turning unviable at current price levels, merchant pellet players are actively exploring the domestic market.

Offers heard a week back before the duty was imposed from Godawari Power and Ispat Ltd. (GPIL) were at INR 10,300/t exw ($133/t) and other Raipur-based pellet producers had floated offers at INR 9,900-10,000/t ($127-129/t) exw.

Buyers are negotiating hard with sellers and are expecting a sharp correction in pellet offers in the days to come. Still market participants are looking for more clarity on prices. India's largest iron ore miner, NMDC, cut prices up to INR 750/t on 25 May, sources informed SteelMint. Fines prices have been reduced by INR 750/t and DR-CLO prices by INR 720/t. Prices have fallen to a four-month low.

Pellet-based DRI (P-DRI, FeM 80%) prices in Raipur stood at INR 33,000/t exw, down INR 3,000/t w-o-w. On a daily basis, sponge iron prices decreased by around INR 500/t.

Indian pellets market overview:

Most of the sellers and buyers across regions preferred to remain silent. They are eagerly looking for some relief from the government as submissions have been sent to the government. Market participants are still under pressure after the duty imposition last week.

However, iron ore pellet (Fe 63%) price indications in Bellary inched down to INR 9,200/t exw today as against INR 9,900/t on 27 May, as per SteelMint assessment. Offers and price indications in Durgapur have fallen by INR 250/t compared to the beginning of this week.

Region-wise pellet offers and deals: