SteelMint: PELLEX rises sharply in Feb'22 even as trade volumes drop over 40%, m-o-m

SteelMint's domestic pellet index, PELLEX, which monitors the central Indian market of Raipur in Chhattisgarh, saw total traded volumes in Feb'22 fall 42% to 104,000 tonnes (t) from 179,500 t in Jan, SteelMint data shows.

Even as the index edged higher total trades contracted due to the lack of interest among buyers to make purchases at steep prices. Traded volumes had reached a 15-month high in Dec to nearly 240,000 t.

Some mills in central India had taken maintenance shutdowns in the early half of Feb and sponge iron producers showed preference for lump ore from NMDC (Chhattisgarh) due to rising pellet prices.

Buying interest from the sponge iron producers remained dismal on record high coal import prices as supply tightness prevailed amid the surge in global oil and gas prices.

Buying interest recovered somewhat towards the end of the month following NMDC's upward revision in prices by up to INR 680/t and the rise in iron ore prices in Odisha on tight availability of high-grade ore preferred by domestic steel producers.

Prices rise steadily

The outlook for pellet prices remains bullish on sponge iron prices rising to an all-time high in Raipur on 1 March since 2010. A combination of high steel and raw materials prices drove the index to a four-month high on 1 March, breaching the INR 13,000/t DAP Raipur ceiling for Fe 63% pellet.

The inflow of export enquiries from geographies other than China, such as the EU, amid the ongoing conflict between Russia and Ukraine has boosted prices.

SteelMint assesses the weighted average price of pellets in Raipur at INR 12,419/t in Feb - an increase of 9% from INR 11,388/t DAP Raipur in Jan.

A sharp rise in semi-finished steel and DRI prices in end Feb keeps pellet prices firm at a high level and bullish trends in the steel market at a time when geopolitical conflicts are threatening to disrupt supply chains are keeping prices supported.

PELLEX

Pellex monitors the dynamics of India's largest merchant pellet market - Raipur. Along with recording sales and offers from Raipur-based producers, the index also tracks deals concluded by pellet producers based in other major markets of the country - Odisha, Karnataka and western India - for sponge iron manufacturers in Raipur. It is a mathematically precise index aiming to provide accurate price assessment for traders.