India: PELLEX remains stable amid moderate trades

• Odisha-based suppliers float competitive offers
• Sponge iron, billet prices drop sharply

Pellet prices in Raipur have remained largely stable this week, with moderate trading activity in the market. Despite subdued demand, buyers from Raipur showed increased interest in procuring pellets from Odisha, lured by competitive pricing.

PELLEX, BigMint’s bi-weekly domestic pellet (Fe63%) index for Raipur, remained stable at INR 9,950/t ($117/t) DAP Raipur on 29 April compared to the previous assessment on 25 April. In this publishing window, deals for around 8,000 t of pellets (Fe63%) were concluded by Raipur-based sellers at INR 9,900/t ($116/t) exw. Deals for around 15,000 t were concluded by Odisha-based sellers in Raipur at INR 9,550/t ($112/t) DAP.

A continuous decline in sponge iron (P-DRI) and semi-finished steel prices has prompted many Raipur-based buyers to explore cost-effective alternatives from neighbouring regions. A steelmaker commented: “The price difference between Odisha and local offers is currently justifying the transactions with the drop in PDRI prices.”

Local pellet suppliers have largely held their offer levels steady, although market inquiries have dipped slightly. Raipur pellet offers were recorded at INR 9,900-10,000/t exw ($116-117/t), unchanged since last week. “We are currently dispatching material booked in earlier deals. New inquiries have slowed due to the prevailing bearish sentiment in the steel market,” said a Raipur-based manufacturer.

Pellet offers (Fe62.5-63%) from Odisha for Raipur buyers were heard at INR 9,300-9,700/t ($109-114/t) DAP and some transactions were recorded.

The steel market continues to show weakness, leading to cautious buying behaviour. Most participants expect pellet prices to remain under pressure in the coming days.

A market participant informed, “There is limited scope for upward price revision unless we see recovery in steel and sponge iron markets. Going forward, deals are likely to continue on a need-based basis as buyers avoid bulk purchases amid market uncertainties.”

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 (1) was taken for calculations. The T1 trade category was accorded 50% weightage.
• Eighteen (18) firm offers, bids, and indicative prices were heard. Fourteen (14) were taken for price calculation and given the balance 50% weightage.

Factors impacting pellet prices

• Sponge iron tags fall w-o-w: P-DRI prices declined INR 1,100/t ($13/t) w-o-w to INR 24,700/t ($290/t) exw-Raipur on 29 April. Meanwhile, prices remained stable d-o-d. Trades remained almost nil in today’s session as buyers opted for a wait-and-watch stance.
• Billet prices down w-o-w: Billet prices in Raipur decreased by INR 750/t ($9/t) w-o-w to INR 40,500/t ($476/t) exw today. D-o-d, prices remained stable. Due to weak buying appetite trading activity remained under pressure in the semi-finished steel segment.

Outlook

Pellet prices in central India will remain under pressure due to need-based buying by steelmakers from local suppliers and those from the nearby states.