- Pellet offers drop INR 300/t, DRI down INR 1,200/t w-o-w
- NMDC revises iron ore prices upward for May
Pellet prices in Raipur witnessed a decline this week, driven by weak market sentiments and a continued downtrend in semi-finished steel prices. Local pellet manufacturers slashed their offers due to subdued demand and the absence of strong counter bids, particularly as sponge iron (PDRI) and semi-finished steel prices kept sliding.
PELLEX, BigMint’s bi-weekly domestic pellet (Fe63%) index for Raipur, fell by INR 150/t ($2/t) to INR 9,800/t ($116/t) DAP Raipur on 2 May compared to the previous assessment on 29 April. In this publishing window, deals for around 17,000 t of pellets (Fe63%) were concluded by Raipur-based buyers at INR 9,500-9,600/t ($113-114/t) DAP from Odisha. Local sellers failed to get a response even at revised offers.
Steelmakers noted that competitive pellet offers from Odisha for Raipur-based buyers, along with isolated spot trades, added further pressure on local pellet prices. A buyer informed, “Odisha-based suppliers are offering at relatively lower prices, and this is creating pressure on Raipur-based pellet-makers to match or reduce prices.”
Raipur-based pellet producers reduced their offers for Fe63% (+/- 0.5%) material by INR 300/t ($4/t) to INR 9,600-9,700/t ($114-115/t) exw on 30 April, following weak market sentiments and competitive offers from Odisha-based suppliers. However, a few plants kept their sales closed, completing dispatches of previous orders.
Pellet offers (Fe62.5-63%) from Odisha for Raipur buyers were heard at INR 9,300-9,600/t ($110-114/t) DAP, and some transactions were recorded.
Market participants also cited expectations of further corrections in semi-finished steel prices, prompting buyers to book only as per immediate requirements while avoiding large-volume deals. Another steelmaker added, “There is no point in stocking up when the prices are expected to fall further. We are booking on a need-only basis.”
However, NMDC Chhattisgarh has hiked its iron ore prices for May deliveries after keeping prices unchanged since January. This price hike, has not yet translated into improved sentiment in the pellet market. A pellet producer commented, “The iron ore hike was unexpected, but with demand remaining sluggish, it is uncertain how the market will absorb the hike.”
NMDC Chhattisgarh has fixed prices of DR CLO (10-40 mm, Fe 67%) at INR 7,210/t ($85/t) and of iron ore fines (-10 mm, Fe 64%) at INR 5,500/t ($65/t), an increase of INR 140/t ($2/t) and INR 440/t ($5/t), respectively. Prices are on FOR basis from its Bacheli complex and include royalty, DMF and NMET charges.
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 both were not taken for calculations. The T1 trade category was accorded 0% weightage.
- Fifteen (15) firm offers, bids, and indicative prices were heard. Fourteen (14) were taken for price calculation and given the balance 100% weightage.
Factors impacting pellet prices
- Sponge iron tags fall w-o-w: P-DRI prices declined INR 1,150/t ($13/t) w-o-w to INR 24,200/t ($286/t) exw-Raipur on 2 May. Meanwhile, prices inched up by INR 50/t ($0.5./t) d-o-d. Today, the market witnessed a downtrend, as buyers stayed silent amid fluctuation in the market. Meanwhile, offers continued to hold.
- Billet prices down w-o-w: Billet prices in Raipur decreased by INR 450/t ($5/t) w-o-w to INR 40,300/t ($478/t)424976 exw today. D-o-d, prices remained stable. The trade market remained cautious amid muted trading activity in the region.
Outlook
As per BigMint analysis, Raipur pellet prices are expected to remain under pressure in the near term until clearer market direction emerges.
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