SteelMint: PELLEX falls to three-month low on competitive offers from nearby regions

SteelMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, stood at INR 11,700/tonne (t) DAP Raipur on 12 April, 2022, down around INR 900/t compared with the last assessment on 8 April. Prices have hit a three-month low, as per data maintained with SteelMint. One deal was heard to have been concluded for 10,000 tonnes of pellets at around INR 11,400-11,500/t FoR Raipur in the last few days from another state but it could not be confirmed at the time of publishing.

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 but not taken into consideration in this publishing window . Hence accorded 0% weightage for T1 trade.
  
  
• Ten (10) firm offers, bids and indicative prices were reported. Four (04) were taken for price calculation and given 100% weightage.
  
  
• SteelMint received one bid but not considered for calculation of the index.
  
  

Raipur, Chhattisgarh-based pellets producers have decreased domestic offers by INR 800/t ($11/t) from INR 12,800-13,000/t ($169-171/t) to INR 12,000-12,300/t exw ($157-162/t). Declining sponge iron prices and cheaper landed offers from Durgapur and Odisha have pulled down offers in Raipur, SteelMint notes.

However, there were not too many deals in the domestic market. A limited number of these were heard at competitive landed cost from nearby regions, especially Odisha and West Bengal, but none could be confirmed.

Jharsuguda-based producers are offering at INR 10,500-10,600/t exw. However, bulk deals are still missing from the market.

Gaps between offers and bids are still prevailing and the key reason for the slow market. Buyers are expecting Raipur pellet offers to drop.

Pellets-based DRI (P-DRI, FeM 80%) prices in Raipur decreased to INR 35,500/t exw, down by around INR 2,000/t w-o-w. On a daily basis, sponge iron prices also dropped by around INR by 200/t.

OMC's iron ore auction may impact market further:

State PSU miner OMC has scheduled an iron ore auction for 18 April, 2022. Around 581,000 t of lump ore and 1.145 mnt of fines will be put up for auction. The base price of the auction is yet to be disclosed. In the previous auction, the miner received active response, with 1.93 mnt (97%) of material getting booked out of a total of 1.988 mnt offered.

Indian pellets market overview: Domestic pellet prices were down sharply across regions on falling sponge iron prices and demand for pellets.

• Iron ore pellet (Fe 63%) prices in Bellary inched down to INR 9,700/t exw today as against INR 10,000/t on 8 April, as per SteelMint's assessment. Deals for 15,000 t were confirmed in this publishing window at around INR 9,600/t exw.
  
  
• Jindal SAW has sharply decreased pellet offers today. The current offer for Fe 63% pellet stands at INR 13,200/t ($173/t) DAP Kandla compared to offers of INR 14,500/t ($191/t) heard in the beginning of March. Around 10,000 t of deals were recorded at INR 13,200/t.
  
  

Region-wise pellets offers and deals: