PELLEX Down by INR100/WMT

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PELLEX decreased to INR 6,050/WMT (DAP Raipur) on reduced domestic offers. No significant transaction was reported during this publication window.

Raipur based plants’ have decreased their offers by INR 200/MT to INR 6,000/MT( Ex-plant); normalizing for freight to Raipur at INR 6,150/MT (DAP Raipur). A major Raipur based pellet maker has taken maintenance shutdown till 10th Sept 2019.

SteelMint P-DRI Assessment (Aug 30, 2019) down by INR 300/MT to INR 16,000/MT (Ex-Raipur) against INR 16,300/MT (Ex-Raipur) a couple of days back.

No export transactions were reported in this publishing window, however, the market expects prices to be in the range of USD 105-107/DMT CFR China, equivalent to USD 92-94/DMT FoBIndia for standard grade pellet (Al3%). Since the export market is illiquid, export realization factor has been ignored in the computation of PELLEX (as per methodology).

Substitute parity factor has been ignored in the computation of PELLEX (as per methodology).

Why PELLEX? India has installed pellet capacity 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.