SteelMint: PELLEX up by INR 250/t tracking hike in offers

SteelMint's bi-weekly domestic pellet index "PELLEX" increased by around INR 250/t today (23rd Oct'20) to INR 8,950/t, DAP Raipur in recent deals. Deals for 35,000 t pellets have been concluded for Raipur based buyers in this publishing window. They have been concluded from both Raipur based and outside state based pellet makers.

According to market sources, Odisha based pellet maker sold around 5,000 t pellet in the Raipur market today at INR 8,900/t FOR Raipur. Yesterday, Raipur based major pellet makers increased offers by INR 300-500/t to INR 8,900-9,100/t exw Raipur due to tight supplies amid maintenance shutdown at few plants. However, trades are yet to be concluded at the increased offers.

Pellet sponge (P-DRI) prices have increased by around INR 1,200/t w-o-w to INR 20,800/t exw, Raipur today against INR 19,600/t a week ago. However, on a daily basis sponge prices have increased by INR 300/t. In the current week pellet sponge prices have increased around 1,000/t.

Market overview-: Pellet prices in other regions like Jamshedpur and Bellary have also been increased by INR 200-300/t in the last two days amid hike in sponge offers.

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.

• Deals for 35,000 t pellets have been concluded by Raipur and outside Raipur based pellet makers in this publishing window at INR 8,650-8,950/t (DAP Raipur). These transactions were taken into consideration for price calculation and weightage given 80%.
  
  
• Three firm offers were reported this week at INR 9,050-9,250/t (DAP, Raipur) and the rest three from outside Raipur at INR 8,900-9,250/t (DAP, Raipur) which have been given a weightage of 20%.
  
  
• No firm bid has been reported 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 7,800/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: