SteelMint: PELLEX rises INR 350/t on recent hike in offers

SteelMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, increased by INR 350/t to INR 10,650/tonne (t) DAP Raipur on 19 September, 2023 compared to the last assessment on 15 September. A deal of 10,000 t was recorded at INR 10,250/t DAP Raipur in this publishing window so far.

Following the increase in bid prices in yesterday's OMC iron ore auction and the previous week's price revision by NMDC, pellet producers in central India have increased prices. However, demand is moderate as buyers are engaged in need-based purchases due partly to sufficient inventory. However, Ganesh Chaturthi festival today also slowed the market down, according to sources.

In OMC's auction, 2.87 mnt of iron ore (2.25 mnt of fines and 0.62 mnt of lumps) were offered out of which 2.25 mnt of fines and 324,000 t of lumps were sold. Bids rose higher up to INR 850/t for fines and and INR 900/t for lumps. Tight merchant availability and hike in pellet and steel prices pushed iron ore prices higher.

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 but not taken into account for price calculation and hence accorded a 0% weightage for T1 trade.
  
  
• Ten (10) firm offers, bids, and indicative prices were heard. Nine (9) were taken for price calculation and given the balance 50% weightage.
  
  

Factors driving prices

• Pellet offers increase in Raipur: Godawari Power and Ispat Ltd (GPIL) has raised pellet (Fe 63.5% and Fe 66%) offers by INR 300/t to INR 10,800/t ($133/t) and 12,800/t ($157/t) exw-Raipur, respectively. However, other pellet-makers are offering at INR 10,400-10,500/t exw. A few plants have suspended sales for a few days, while one key producer will deliver current orders after mid-October as it is currently supplying material pledged as part of old contracts.
  
  
• PDRI prices rise: SteelMint's price assessment for sponge PDRI (FeM 80%) in Raipur increased sharply by INR 1,550/t w-o-w to INR 31,750/t exw on 19 September. The current Indian sponge market is facing coal shortage which has prompted sponge makers to raise their offers. Prices in the region increased by INR 50-300/t. However, due to higher spot market offers, buying activity and demand for sponge iron remained low.
  
  
• Billet prices improve in Raipur: Billet prices in Raipur inched up by INR 1,250/t w-o-w to INR 45,100/t exw Raipur on 19 September. However, Billet prices in Raipur fluctuated throughout the day due to the impact of market sentiments in north India, while buying activity was limited amid volatile sentiments.