SteelMint: PELLEX slips on dearth of trade, falling export realisations

SteelMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, fell by INR 50/t to INR 14,400/tonne (t) DAP Raipur on 17 Aug'21. No deal was heard in this publishing window. Current offers from Raipur-based pellet producers are stable at INR 14,200-14,500/t exw for Fe 63% grade material, SteelMint learnt from sources.

Interestingly, Raigarh- and Jharsuguda-based producers have lowered offers by INR 500-600/t and are currently floating offers at around INR 13,500/t exw. Deals have also been heard concluded for Raigarh.

With Indian pellet export prices falling to an eight-month low, bids from Raipur players have edged lower. As per sources, inquiry for pellet still remains weak in the domestic market as buyers are anticipating a price cut in Raipur. Buyers happen to be exploring offers from other markets too.

SteelMint's benchmark pellet sponge (P-DRI, FeM 80%) prices rose by INR 1,000/t w-o-w to INR 32,000/t exw-Raipur on 17 Aug. However, on a daily basis, P-DRI prices were recorded stable. Strong demand as well as supply shortage continue to support sponge iron prices.

Indian pellet market overview:

SteelMint's assessment for Bellary iron ore pellet (Fe 63%) stands at INR 12,500 /t exw, down slightly compared to the last assessment of INR 12,500-12,600/t on 13 Aug'21. Around 22,000 t of pellet have been sold at INR 12,500-12,600/t exw.

Barbil-based pellet offers also declined by around INR 500/t to INR 13,500/t (loaded on to wagon). A few deals were heard concluded at the price mentioned.

Rationale:

• PELLEX has been derived using data points: i.e., trade, offers and bids. You can download the detailed methodology by clicking on this link Click here.
  
  
• No deal was reported in this publishing window and hence not considered as T1 for index calculation, being given 0% weightage.
  
  
• Nine (09) firm offers and indicative prices were reported. Four were from Raipur and the rest from outside the state capital. Eight (08) were taken for price calculation and given a weightage of 100%.
  
  
• SteelMint received one bid today at INR 13,000/t (delivered to Raipur). As it didn't fall into the calculation bracket based on the methodology, the deal was not considered for calculation of the index.
  
  

Outlook: Pellet offers in Raipur are expected to correct on falling export realisations and declining offers in other markets such as Jharsuguda, Barbil and Durgapur.

Region-wise pellet offers and deals: