PELLEX Down by INR 150/MT On Recent Trades

The market expects NMDC to revise iron ore prices this week

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PELLEX down by INR 150 to INR 6,100/wmt (DAP Raipur) against the last index at INR 6,250/wmt published on 16th Aug due to recent transactions. Deal for around 25,000 MT pellets was reported at INR 6,000-6,100/MT (DAP Raipur).
SteelMint P-DRI assessment (Aug 20, 2019) moved down by INR 600/MT to INR 15,500/MT (Ex-Raipur) against INR 16,100/MT (Ex-Raipur) on Aug 16, 2019.

No export transactions were reported as Chinese steel mills prefer iron ore lumps over pellets. Pellet Export realization has come down to USD 96-100/DMT FoB (Al 3%) due to the absence of bids from China.

According to railway movement data compiled with SteelMint, NMDC supplied only 8 iron ore rakes to Chhattisgarh based units during 1st half of the month (1st-15 Aug’19) over monsoons. On an average NMDC supply around 40-50 rakes to state-based units in a month’s time.

The market expects NMDC to revise iron ore prices this week.

Why PELLEX? India has installed pellet capaci1ty of 85 MnT pa and an annual production of around 65-66 MnT. 5 major states – Odisha (28.9 MnT), Karnataka (19.5 MnT), Chhattisgarh (9.6 MnT), Jharkhand (8.4 MnT) and Andhra Pradesh (8 MnT) – covers around 85-90% of the capacity. Based on the above we have chosen Raipur as our index base as this market seems more active from a domestic merchant trading perspective along with exports. Also, Chhattisgarh has a good base for sponge iron makers (DRI) who procure a decent amount of pellets.

These factors have led SteelMint to launch this index of PELLET on DAP Raipur basis.
The proposed specifications, along with delivery terms were devised following consultation with market participants.

They are as follows:

1. Fe Content – Fe 63-64%
2. Combined Silica & Alumina – 7%
3. Trade Size – 2,500-10,000 MT
4. Payment terms – Advance

SteelMint will continue to monitor changes in the pellet markets and will adjust its methodology in accordance with the market participants.