Falling Export Market Brings PELLEX Down by INR 200/MT

SteelMint pellet Index (PELLEX) moved down by INR 200/MT to 6,450/ MT (DAP Raipur) against the last index published on 02nd Aug’19 amid falling indications in the export market and reduction in offers by pellet makers this week.

The deal for 5,000 MT pellet was reported at INR 5,500-5,600/MT (Ex plant) from Odisha based plant; normalizing for quality and freight to Raipur at INR 6,250-6,350/MT (DAP Raipur). Raipur based plants lowered pellet offers by INR 300/MT to INR 6,650 /MT (DAP Raipur) yesterday.

Pellet export realization for standard grade pellet has come down to USD 111-113/MT FoB (Al 3% ); due to declining iron ore prices in China. Market sentiments in the pellet export market turned very weak after a sharp decline in global iron ore fines index by USD 9 yesterday.

Odisha based major miner - Serajuddin Mines reduced lump (5-18) offer by INR 300/MT last week.NMDC supplied 18 rakes (0.07 MnT) to state-based units in Jul’19, down 51% against 37 rakes (0.14 MnT) a month before. Production dispatches are negatively impacted because of monsoons.

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.