SteelMint

India: PELLEX remains stable w-o-w on sluggish trade

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by

Ratiram Gurjar
in
  • Buyers continue to procure pellets from Odisha
  • P-DRI prices remain stable, billet prices slide
  • Pellet prices in Raipur may remain under pressure
The pellet market in Raipur was slow this week. Prices remained stable among Raipur-based producers. BigMint’s bi-weekly domestic pellet (Fe63%) index stood steady at INR 8,650/tonne ($103/t) DAP Raipur as of 10 September 2024, unchanged from 6 September.

Local producers saw muted trading activity this week, as major buyers had secured substantial quantities last week following a price reduction. However, around 15,000 t of pellets (Fe63%) were sold by producers at INR 8,750/t ($104/t) DAP Raipur over the last weekend. Additionally, Raipur buyers purchased approximately 4,000 t of pellets (Fe62.5%) from Odisha at INR 8,400/t ($100/t) DAP this week.

Neighbouring plants received good inquiries from buyers in Raipur and Bilaspur, with prices ranging from INR 8,000-8,400/t ($95-100/t) on a DAP basis for Fe62.5-63% material.

A sponge iron manufacturer commented: “Buying interest for raw pellets remained sluggish this week, as major buyers had already purchased sufficient material in recent days. The lack of improvement in sponge and billet prices has further dampened market confidence regarding raw material inventory.”

According to sources, participants are eagerly awaiting the revision of NMDC iron ore prices and are currently hesitant to buy pellets. The recent decrease in iron ore and pellet export prices has led to material from pellet plants in Odisha being diverted to the domestic market. Raipur buyers are receiving competitive prices from Odisha-based plants, which may prompt them to reconsider their offers.

“Market participants have slowed down their procurement due to sufficient stocks and limited sponge iron trades. However, there have been some aggressive purchases in the last few days. We are receiving inquiries for pellets, but the counter bids are lower than the offers from the steelmakers. Considering production costs and recent trends in iron ore prices, we have kept our offers stable and are waiting to conclude deals,” a pellet producer from a neighbouring region said.

Rationale

  • PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
  • One (1) deal was reported in the publishing window, and considered for price calculation and accorded a 50% weightage for T1 trade.
  • Twenty-five(25) firm offers, bids, and indicative prices were heard. Twenty-one (21) were taken for price calculation and given the balance 50% weightage.

Factors influencing PELLEX

  • Pellet offers stable in Raipur: Raipur-based pellet makers have kept their offers for Fe 63% (+/- 0.5%) stable at INR 8,600/t ($102/t) ex-works Raipur as of 10 September. Sales from local sellers have been absent so far this week.
  • Sponge iron prices stable w-o-w: P-DRI prices remained stable w-o-w at INR 24,700/t ($294/t) exw-Raipur on 10 September. However, prices edged up by INR 50/t ($0.5/t) d-o-d today. The decline in sponge iron prices was fuelled by lacklustre demand in the downstream market. Buyers were reluctant to make purchases and opted to await further market adjustments.
  • Billet prices decline w-o-w: Billet prices in Raipur declined by INR 600/t ($7/t) w-o-w to INR 37,450/t ($445/t) exw. However, on a d-o-d basis, billet prices decreased by INR 250/t ($3/t). The index showed a downtrend amid a lack of buying confidence among end-users, and trade activity remained low.

Outlook

According to BigMint’s analysis, pellet prices in the Raipur region may remain under pressure this week as the market anticipates an upcoming NMDC price revision, which is expected to be announced soon.

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