India: PELLEX falls by INR 50/t with market eyeing reduction in offers

• Raipur pellet offers unchanged, bid-offer gap widens
• Sponge PDRI, billet prices fall by INR 450-700/t w-o-w

Raipur’s pellet market remained under pressure as buying interest continued to wane amid a bearish trend in the sponge iron and billet markets. Prices for sponge and billet products have dropped by INR 400-500/t in recent days, discouraging buyers from entering new deals and pushing the market down further.

Price movements

PELLEX, BigMint’s bi-weekly domestic pellet (Fe63%) index for Raipur, fell by INR 50t ($0.5/t) to INR 9,200/tonne (t) ($107/t) DAP Raipur on 13 June compared to the previous assessment on 10 June. Raipur-based pellet makers kept their offers firm for Fe 62/63% (+/_0.5%) material at INR 9,000-9,100/t ($105-106/t) exw on 6 June.

No deals were recorded in the Raipur market in this publishing window amid bid-offer disparity among steelmakers.

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.

In the NMDC Chhattisgarh auction on 13 June, 4,000-t Baila-sized lumps (10-20 mm, Fe 65.5%) were sold at the base price of INR 6,500/t; 21,500-t DRCLO (10-40 mm, Fe 67%) and 86,000-t fines (Fe 64%) received no bids. Prices were on FOR basis, inclusive of royalty, DMF, and NMET.

Market sentiments

A steelmaker from Raipur informed, “Most of the buyers have already procured material earlier this month. With falling steel prices, they are now holding off on fresh purchases in anticipation of further corrections.”

A trader commented: “Pellet deals in the spot market have been very limited, with sellers reporting sluggish activity.“

Market participants attribute the weak sentiment to the broader decline in semi-finished steel prices, which has led to cautious purchasing behaviour. A local producer said, “There is a clear bid-offer gap emerging. Buyers are expecting prices to come down further, while sellers are largely holding firm or refraining from quoting altogether.”

Despite the lack of active inquiries, most sellers have maintained their current offer levels, waiting to see if the market stabilizes. However, with no immediate recovery in demand or prices in the sponge iron and billet segment, sentiment remains subdued.

Furthermore, market sources suggest that pellet prices may remain under pressure in the near term and could witness a further decline if demand does not pick up. The gap between buyer expectations and seller offers remains a key point of concern.

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
• No deals were reported in this publishing window, and was not taken for calculations. The T1 trade category was accorded 0% weightage.
• Twenty (20) firm offers, bids, and indicative prices were heard. Sixteen (16) were taken for price calculation and given a balance of 100% weightage.

Key market drivers

• Sponge iron tags fall d-o-d: P-DRI prices fell by INR 450/t ($6/t) w-o-w to INR 22,850/t ($265/t) exw-Raipur on 13 June. Meanwhile, prices went down by INR 150/t ($2/t) on d-o-d. Lower bids and intense competition from neighbouring markets further weighed on trading volumes.
• Billet prices down w-o-w: Billet prices in Raipur decreased by INR 700/t ($9/t) w-o-w to INR 37,900/t ($440/t) exw today. However, d-o-d, prices saw a drop of INR 150/t ($2/t). Market sentiment remained volatile, with some recovery in buying interest for semis, primarily driven by attractive lower prices. However, the finished steel market continued to face sluggish movement, prompting further price corrections in some segments.

Outlook

According to BigMint’s analysis, pellet prices in Raipur may drop in the coming days amid weakened buying appetite and downtrend  in sponge iron tags. After OMC’s June iron ore auction next week a clearer picture will emerge.