- Pellet offers in Odisha rise post OMC auction
- Sponge iron, finished steel offers fall in Raipur
- One Raipur-based producer raises offers by INR 500/t
BigMint’s bi-weekly domestic pellet (Fe63%) index increased by INR 250/t ($3/t) to INR 10,550/t ($127/t) DAP Raipur on 21 May, 2024 compared to the last assessment on 17 May. Sponge iron and steelmakers in Raipur booked around 55,000 t of pellets at around INR 10,250-10,600/t DAP Raipur a couple of days back from both Odisha- and Raipur-based producers in this publishing window.
The pellet market has remained in an uncertain mode in the last couple of days post-OMC auction. Today, pellet prices in Odisha and West Bengal increased by INR 500-600/t ($6-7/t) after the sharp rise in bids in OMC’s auction concluded on 21 May.
In addition, pellet producers in Raipur kept their offers stable at INR 10,500-10,600/t ($126-127/t) exw. However, one pellet-maker raised offers to INR 11,000/t ($132-133) exw today. Following the price hike in Odisha, a prominent Raipur-based producer also increased offers. A key producer in Raipur has taken a maintenance shutdown for the next 15-20 days.
A trader said: “Bid-offer disparity was seen in the market as sponge and finished steel prices fell over the week. Buyers want to book pellets at cheaper offers but higher bids in the OMC auction have driven pellet prices higher in Odisha”.
A buyer said: “The current market dynamics is very unpredictable as iron ore and pellet offers have increased by around INR 500-600/t in the central and eastern regions. Buyers are hesitating to purchase pellets while some steelmakers have already bought raw pellets a couple of days back in expectation of a price hike”.
On the other hand, a workers’ strike has disrupted the movement of NMDC rakes thereby hampering DR-CLO supplies in Raipur. In normal circumstances, NMDC operates 18-20 rakes per day. However, during the strike, this has dwindled to 7-8 rakes per day, sources informed BigMint. At present, around 10-12 rakes per day are dispatching material to steelmakers in the central and eastern regions.
- Sponge P-DRI prices fall w-o-w: PDRI prices dropped INR 700/t ($9/t) to INR 28,900/t ($348/t) exw on 24 May. Meanwhile, prices fell by INR 300/t ($4/t) d-o-d. Prices fell on dearth of buying enquiries in the spot market today. As a result, suppliers in various regions of the country reduced their offers.
- Billet prices drop w-o-w: Billet prices in Raipur decreased today by INR 350/t ($4/t) w-o-w to INR 44,400/t ($532/t) exw, while prices inched down by INR 100/t ($1/t) d-o-d. Today, the index saw a further decline due to weak market sentiments and muted demand, leading to a slowdown in offers. Only limited buying was observed in the semi-finished and finished steel markets throughout the day.
Rationale
- PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology Click here.
- Two (2) deals were reported so far in this publishing window and one was taken into account for price calculation and accorded 50% weightage for T1 trade.
- Twelve (12) firm offers, bids, and indicative prices were heard. ten (10) were taken for price calculation and given the balance 50% weightage.
Outlook
Pellet prices in Raipur are expected to remain volatile as iron ore prices have increased while sponge iron and finished steel prices have trended lower. The market may get some price clarity next week.