SteelMint: PELLEX remains supported on higher bids in OMC's iron ore auction

SteelMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, remained unchanged at INR 10,100/t DAP Raipur on 19 December, 2023 compared to the last assessment on 15 December amid a hike in offers. One deal of 10,000 t of pellets (Fe63%) was reported at INR 9,950/t DAP Raipur in this publishing window. Active participation and higher bids in today's OMC's iron ore fines auction has kept sentiments supported.

Buyers booked the pellets on a need basis owing to previous inventories in hand. However, few sources stated that current offers are generally higher for sponge makers, as sponge iron and finished steel offers remained southward while deals were done only at lower offers. The current prices were supported by decent export offers and increased raw material costs amid some uncertainty in rake availability.

On 15 December, 2023, NMDC conducted iron ore auctions, offering 260,800 t from the Bacheli and Kirandul mines in Chhattisgarh. The entire quantity, comprising 168,000 tonnes of fines (Fe64%) and 63,000 tonnes of DRCLO (6-40mm, Fe 65.5%), was reportedly booked at prices ranging from INR 4,770 t and INR 7,060/t. Of the 29,400 tonnes of ROM (10-150mm, Fe 65.5%) offered from Kirandul and 8,400 tonnes from Bacheli, several lots were booked. Delivery will be on a FOR (by rail) ex-mine basis.

Rationale:

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology Click here.
  
  
• One (1) deal was reported so far this week, taken into account for price calculation and accorded 50% weightage for T1 trade.
  
  
• Ten (10) firm offers, bids, and indicative prices were heard. Five (5) were taken for price calculation and given the balance 50% weightage.
  
  

Market highlights:

• Pellet offers stable: GPIL pellet (Fe63.5% and Fe66%) offers remained stable at INR 10,300/t ($124/t) and INR 12,300/t ($148/t) exw-Raipur recently. Other pellet makers offers also remained unchanged at INR 9,900-10,000/t ($119-120/t) exw-Raipur.
  
  
• Raipur P-DRI prices down w-o-w: SteelMint's price assessment for sponge P-DRI (FeM 80%) in Raipur decreased by INR 550/t w-o-w to INR 27,150/t exw on 19 December. Prices sharply dropped by INR 300/t d-o-d. Broadly, fluctuation in prices for sponge iron has been caused by price volatility for steel. Market sources are therefore concerned about price swings.
  
  
• Raipur billet prices fall w-o-w: Billet prices in Raipur inched down w-o-w by INR 400/t to INR 40,450/t exw on 19 December. Prices witnessed a drop of INR 200/t on d-o-d basis. The decline was attributed to weak buying activity in the finished steel market as well as existing negative attitudes, which influenced the d-o-d drop. Despite the overall decline, buying activity in semi-finished steel remained moderate, showing that fewer offers suited need-based requirements.
  
  

Outlook

Pellet prices may remain firm in the coming days amid active export offers. However, the volatility of the sponge and finished steel market may affect the raw pellet offers in the regions.