- Sponge PDRI, billets fall by INR 400-550/t w-o-w
- Mills wait for OMC’s Jun auction for price clarity
The pellet market in the Raipur region remained largely silent this week, with limited trading activity observed across key segments. Market participants cited weak sentiment in the downstream steel sector, coupled with a decline in sponge iron and semi-finished steel prices, as key reasons behind the sluggish buying trend.
Price movements
PELLEX, BigMint’s bi-weekly domestic pellet (Fe63%) index for Raipur, remained stable at INR 9,200/tonne (t) ($107/t) DAP Raipur on 17 June compared to the previous assessment on 13 June. Raipur-based pellet makers kept their offers stable for Fe 62/63% (+/_0.5%) material at INR 9,000-9,100/t ($105-106/t) exw.
Deals for around 15,000 t of pellets (Fe62%) were recorded by a Raipur-based supplier in this publishing window, while other plants encountered bid-offer disparities.
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. Around 5,000 t were sold by an Odisha-based pellet producer at INR 8,700/t ($103/t) DAP Raipur.
Market sentiments
Steelmakers and sponge iron producers refrained from aggressive bookings and maintained a cautious stance, expecting a potential drop in pellet prices. A steelmaker commented, “We are waiting for prices to correct further before making any fresh purchases. Current pellet offers are not viable, considering the fall in semi-finished steel prices.”
Sellers, too, confirmed that inquiries were muted, and buyers showed little interest at the prevailing offers. A supplier informed BigMint, “There is clearly a gap between offers and bids, and we are not seeing much traction in the market. We are currently not offering in the Raipur market amid poor inquiries.”
Additionally, market participants are waiting for price clarity from the upcoming OMC iron ore auction scheduled for 19 June, which could set the tone for raw material pricing in the coming weeks. Until then, most buyers are expected to remain on the sidelines.
While a few pockets of deals were reported, which were booked on an urgent basis by steelmakers to operate their plants, overall sentiment remained bearish. Traders noted that the market is unlikely to revive unless there is a meaningful correction in pellet prices.
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 taken for calculations. The T1 trade category was accorded 50% weightage.
- Fifteen (15) firm offers, bids, and indicative prices were heard. Thirteen (13) 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 400/t ($5/t) w-o-w to INR 22,850/t ($265/t) exw-Raipur on 17 June. Meanwhile, prices moved down by INR 50/t ($0.5/t) d-o-d. Today’s trading session remained quiet, and no deals were recorded amid the downtrend and lack of buying confidence in the market.
- Billet prices down w-o-w: Billet prices in Raipur decreased by INR 550/t ($6-7/t) w-o-w to INR 37,800/t ($440/t) exw today. However, d-o-d, prices remained unchanged. As some transactions took place yesterday, buyers likely held back from closing deals today, which further weighed on trades and sentiments.
Outlook
According to BigMint’s analysis, the pellet market is expected to face further downside pressure, as buyers hold back from purchases amid expectations of a price drop.
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