India: PELLEX remains stable amid limited trade activities

• Buyers remain on sidelines amid volatility
• Raipur sellers keep pellet offers stable

The pellet market in Raipur remained largely stable this week, with trade activities staying subdued as buyers refrained from aggressive purchases owing to previous deliveries of older orders and sufficient iron ore deliveries from NMDC. Market participants indicated that steelmakers continued to book only on need basis, keeping overall demand in check.

BigMint’s bi-weekly domestic pellet (Fe63%) index remained stable at INR 9,800/t ($113/t) DAP Raipur on 14 February compared to the previous assessment on 11 February. Deals for around 8,000 t of pellets (Fe63%) were concluded at INR 9,700/t ($112/t) DAP Raipur by local steel manufacturers over the assessment window.

Local pellet offers remained stable over the past few days, with a few plants keeping their sales closed. Pellet offers in Raipur for Fe63% (+/- 0.5%) remained stable at INR 9,700-9,900/t ($112-114/t) exw.

A pellet seller said, “We are offering in the market, but no deals have been finalised due to a decline in sponge iron and billet prices over the past two three days, along with sluggish inquiries.”

Odisha-based plants offered pellets (Fe62.5-63%) to Raipur at INR 9,400-9,800/t ($108-113/t) DAP, and a few deals were concluded by them.

A buyer commented: “Most buyers are in a wait-and-watch mode due to the uncertainty surrounding sponge iron and steel prices. There is no immediate rush to procure large volumes.”

No pellet deals were witnessed from Odisha by Raipur buyers while neighbouring plants offered at INR 9,400-9,800/t DAP for pellets.

Meanwhile, the sponge iron and finished steel markets saw a slight downtrend in prices in the last couple of days putting pressure on raw material market sentiments.

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
• One (1) deal has been reported so far in this publishing window, and was taken for calculations. The T1 trade category was accorded 50% weightage.
• Sixteen (16) firm offers, bids, and indicative prices were heard. Eleven (11) were taken for price calculation and given the balance 50% weightage.

Factors impacting pellet prices

• Sponge iron tags stable w-o-w: P-DRI prices remained stable w-o-w at INR 24,800/t ($286/t) exw-Raipur on 14 February. However, prices decreased by INR 200/t ($2.5/t) d-o-d today. Sponge iron prices fell amid a lack of buying interest today. Deals remained absent in Raipur today amid the lack of buying inquiries from buyers.
• Billet prices rise w-o-w: Billet prices in Raipur increased by INR 500/t ($6/t) w-o-w to INR 39,300/t ($453/t) exw today. Furthermore, d-o-d, prices moved down by INR 150/t ($2/t). The index saw a decline today due to limited buying activity in the semi-finished steel segment. Downward market sentiments and weak finished steel demand exerted pressure on spot offers.

Outlook

According to BigMint’s analysis, the market is expected to remain volatile, with some buyers awaiting next week’s OMC iron ore auction for February to gauge the tradable levels for pellets.