- Falling sponge iron, semis tags dampen demand
- Buyers delay purchases, expecting price drops
Pellet prices in Raipur remained stable in recent days, which were marked by moderate trading activity. This stability in pellet prices stands in contrast to the recent decline observed in downstream products such as sponge iron and billets. Despite declining price tags of finished and semi-finished steel, pellet sellers largely maintained their offers, leading to a need-based approach from buyers.
Price movements
PELLEX, BigMint’s bi-weekly domestic pellet (Fe63%) index for Raipur, remained unchanged at INR 9,250/tonne (t) ($108/t) DAP Raipur on 10 June compared to the previous assessment on 6 June. Raipur-based pellet makers kept their offers firm for Fe 62/63% (+/_0.5%) material at INR 9,000-9,200/t ($105-107/t) exw on 6 June.
Deals for around 40,000 t were concluded by local pellet producers at INR 9,100/t ($106/t) exw-Raipur in this publishing window. Deals from Odisha-based suppliers to the Raipur market remained limited, given that gap with local plants’ offers has narrowed.
Pellet (Fe 62.5-63%) offers from Odisha for Raipur-based buyers were heard at INR 8,700-9,000/t ($103-105/t) DAP.
Market sentiments
The prevailing sentiment among market participants was one of hesitancy and a lack of active demand. As one local trader remarked, “There is no aggressive demand, as market dynamics are not favourable. Sponge iron and semi-finished prices continued to decline, further dampening interest for bulk deals.”
Some pellet manufacturing plants opted to temporarily close their offers due to this cautious atmosphere and the notable dearth of new inquiries, choosing to wait out the current weak market sentiments.
A key factor contributing to buyer reluctance is the recent reduction in iron ore prices by NMDC Chhattisgarh. One buyer highlighted, “Many buyers are waiting for further price drops since NMDC has already reduced their iron ore prices. This expectation has led to a stand-off, with potential buyers delaying their purchases in hopes of more favourable deals. Consequently, trading volumes have remained low.”
The Raipur pellet market, therefore, appears to be in a delicate balance, awaiting a more decisive shift in demand or a broader recovery in the steel sector to break its current holding pattern.
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 in this publishing window, and one (1) was not taken for calculations. The T1 trade category was accorded 50% weightage.
- Eighteen (18) firm offers, bids, and indicative prices were heard. Fifteen (15) were taken for price calculation and given a balance of 50% weightage.
Key market drivers
- Sponge iron tags fall d-o-d: P-DRI prices fell by INR 250/t (3/t) w-o-w to INR 23,250/t ($272/t) exw-Raipur on 10 June. Meanwhile, prices remained stable d-o-d. Limited demand persisted in the market, and buyers adopted a wait-and-watch mode.
- Billet prices down w-o-w: Billet prices in Raipur decreased by INR 550/t ($6/t) w-o-w to INR 38,350/t ($448/t) exw today. However, d-o-d, prices saw a rise of INR 50/t ($0.5/t). Buyers showed limited interest, opting to wait for clearer market direction, which led to restricted spot trade activity and a w-o-w price decline.
Outlook
According to BigMint’s analysis, pellet prices in the Raipur region will continue to face pressure. The current market dynamics, coupled with the expectation of further iron ore price corrections, are likely to lead to some downward revisions in pellet offers in the near term.
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