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SteelMint's pellet index records sales at 85,000 t in May'21

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Pellets
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14 Jun 2021, 11:25 IST
SteelMint's pellet index records sales at 85,000 t in May'21

SteelMint's bi-weekly domestic iron ore pellet index, PELLEX, recorded total sales of 85,000 t of pellets (Fe 63%) in the Raipur market in May'21 against 163,000 t in Apr - a drop of over 47% on month. High domestic pellet prices and falling semi-finished steel prices dampened buying interest, especially since mid-May, SteelMint notes.

PELLEX: Up and down

A few of the big pellet manufacturers in Raipur did not offer material in the domestic market during the month as firm export demand - resulting from falling pellet stocks at Chinese ports - supported better realisations. Emissions reduction concerns amid anticipated steel output curbs in China supported pellet prices compared to iron ore fines.
Moreover, domestic iron ore prices increased with India's leading state-owned miner NMDC raising iron ore fines and lump prices by INR 1,500/t and INR 700/t on 12 May. Bids increased by 50% at OMC's iron ore fines auction in May and Odisha-based merchant miners such as Essel Mining and Serajuddin & Co. hiked prices by INR 1,500-1,700/t.

Limited domestic availability and high iron ore prices pushed pellet prices higher, with PELLEX breaching the INR 17,000/t, DAP Raipur level in mid-May before sliding towards the latter half of the month on bid-offer mismatch in the market due to high prices. Additionally, soft pellet-direct reduction iron (P-DRI) prices amid subdued trading and weak demand from end-users put pressure on pellet prices.

Price scenario

As per PELLEX assessments throughout the month, the weighted average price for Fe 62.5-63% material stands at INR 16,150/t , DAP Raipur in May -over 14% higher compared to INR 14,106/t, DAP Raipur in Apr.

Even though trading activity continues to remain limited in the Raipur market, pellet producers are witnessing sustained demand from China and growing export opportunities. High global iron ore prices continue to support firm pellet export prices and thereby continue to influence domestic pellet prices.

However, NMDC has rolled over prices for Jun'21 despite anticipation of a hike. Therefore, although a sharp rise in prices looks unlikely for the moment, easing lockdown restrictions in many parts of the country are expected to boost demand for semi-finished steel due to pent-up demand despite the seasonal slowdown in steel demand for construction during the monsoon quarter.

PELLEX

PELLEX closely 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 operating from other major markets in the country - Odisha, Karnataka and western India - for sponge iron producers in Raipur. It is a mathematically precise index aiming to provide accurate price assessment for traders.

 

14 Jun 2021, 11:25 IST

 

 

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