PELLEX Stable at INR 6,050/MT

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PELLEX stable at INR 6,050/WMT (DAP Raipur) owning to no trades and silent market. Raipur based plants’ have kept their offers unchanged at INR 6,000/MT( Ex-plant); normalizing for freight to Raipur at INR 6,150/MT (DAP Raipur).

SteelMint P-DRI Assessment (Sept 03, 2019) down further this week by INR 400/MT to INR 15,900/MT (Ex-Raipur) against INR 16,300/MT (Ex-Raipur) a week before.

One export deal was reported from Odisha to China at around USD 93-94 /MT FoB India for standard grade pellet (Al 3%). Ex -Plant export realization comes around INR 5,250-5,350/WMT (basis the FoB equivalent of USD 93-94/DMT). Since the export market is illiquid, the export realization factor has been ignored in the computation of PELLEX.

Considering the land cost of Lump and other factors like yield, conversion cost etc for NMDC and Orissa; the substitute parity price for Pellet is INR 6,000 (DAP Raipur). Since iron ore movement from NMDC and Odisha has slowed amid monsoons, Substitute parity factor has been ignored in the computation of PELLEX.

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.