SteelMint: PELLEX up by INR 1,200/t ($16) as pellet offers in Raipur hit all time high

SteelMint's bi-weekly domestic pellet index "PELLEX" has increased sharply by INR 1,200/t to INR 11,600/t DAP Raipur today (17th Nov'20). Deal for around 10,000 t pellet has been concluded by a Raipur based pellet maker in this publishing window. Another deal for 20,000 t pellets was heard to have concluded at INR 11,500 exw-Raipur but it could not be confirmed till the time of publishing this report.

Pellet offers in Raipur have hit all time high with offers increasing by INR 1,500/t w-o-w at INR 11,500-11,800/t (ex-plant) recently.

National Mineral Development Corporation (NMDC) has announced 2nd price hike iron ore for this month. Prices have increased further upto 11%. The miner has raised price for Baila fines and lump by INR 300 and INR 400 respectively while that of DR CLO by INR 460/t. With today's price revision made, company's fines price has hit an all-time high while that of lumps are hovering close to five-year high levels.

Odisha's Essel mining has increased iron ore fines price yesterday by around INR 700/t and Rungta Mines by INR 1000/t.

In addition to it, Pellet sponge (P-DRI) prices also increased sharply by around INR 3,200/t w-o-w to INR 25,400/t exw, Raipur. On a daily basis sponge offers increased by INR 900/t in a single day trade.

Market overview-: Pellet prices in other regions like Durgapur and Bellary have increased sharply w-o-w around INR 450-800/t amid scarcity of high-grade iron ore and concluded deals. However, few pellet makers from other regions were not offering pellet today and considering maintenance shutdown in the next few days.

Rationale - PELLEX has been derived using five data points: i.e trades, offers, bids, substitute parity, and export realizations. You can download the detailed methodology by clicking on this link Click here.

• Deal for around 10,000 t pellet has been concluded by a Raipur based pellet makers in this publishing window at INR 11,550/t (DAP Raipur). This transaction was taken into consideration for price calculation and weightage given 80%.
  
  
• Three firm offers were reported this week at INR 11,650-11,950/t (DAP, Raipur) and the rest four from outside Raipur at INR 11,750-11,800/t (DAP, Raipur) which have been given a weightage of 20%.
  
  
• No firm bids reported and not considered in price calculation in this publishing window, and given a weightage of 0%.
  
  
• SteelMint calculated the price at which Raipur pellet can displace NMDC lump in the sponge rotary kiln feed (substitute parity) on a DAP Raipur basis at INR 9,000/t and given a weightage of 0%.
  
  
• The export realization factor has not been considered as pellet makers are less active in exports owing to an increased domestic realization.
  
  

Calculation of Index:

Source-: SteelMint

Region-wise pellet deals and offers: