India: PELLEX remains under pressure amid weakened market sentiments

• Trade activity in Raipur remains muted
• Buyers cautious, see prices dipping further

Pellet prices in the Raipur market continued to remain under pressure, with no trade activity reported in the past couple of days. Market participants attribute this to the prevailing weak sentiments and a cautious approach from buyers.

PELLEX, BigMint’s bi-weekly domestic pellet (Fe63%) index for Raipur, remained stable at INR 9,800/tonne (t) ($115/t) DAP Raipur on 9 May compared to the previous assessment on 6 May. Raipur-based pellet producers kept offers for Fe63% (+/- 0.5%) stable at INR 9,600-9,700/t ($113-114/t) exw. Pellet offers (Fe 62.5-63%) from Odisha for Raipur buyers were heard at INR 9,000-9,600/t ($106-113/t) DAP, and some transactions took place due to the competitive pricing.

In this publishing window, around 10,000 t of pellet deals concluded by Raipur seller at INR 9,700/t ($114/t) exw.

A market participant commented, “There is no urgency from the buyers’ end to book material right now. Most buyers are adopting a wait-and-watch strategy as they expect further corrections in the coming days.”

Despite sellers maintaining their offers, buyers are quoting lower to counter these, resulting in a complete lack of deal closures. A seller informed, “The spread between offers and bids is quite wide, and buying inquiries are also less in the market.”

Inquiries in the spot market have also slowed, contributing to the overall dullness in trading activity. Sponge iron and semi-finished prices showed a southward trend, which kept buyers away from the market.

Another market participant said, “We are seeing very limited movement and steelmakers are reluctant to commit unless they see some stability or a clear trend in prices.”

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 so far in this publishing window, which was taken for calculations. The T1 trade category was accorded 50% weightage.
• Fourteen (14) firm offers, bids, and indicative prices were heard. Ten (10) 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 24,200/t ($284/t) exw-Raipur on 9 May. Meanwhile, prices decreased by INR 50/t ($0.5/t) d-o-d. The market was silent today and no trade took place in the sponge iron.
• Billet prices down w-o-w: Billet prices in Raipur fell by INR 300/t ($4/t) w-o-w to INR 40,000/t ($469/t) exw today. D-o-d, prices dropped by INR 200/t ($2.5/t). Weaker buying interest and lower demand from end-users kept the trading session muted today.

Outlook

As per BigMint’s analysis, with no signs of immediate improvement, the pellets market will face muted sentiment in the near term unless there is a shift in demand or raw material cost dynamics.