India: Pellet trade plummets 25% m-o-m in Aug’25 amid monsoon-induced market weakness

• Pellet prices rise by INR 400-800/t in some regions
• Some plants suspend operations in August

India’s domestic pellet trade witnessed a sharp decline in August, as adverse monsoon conditions and sluggish market dynamics weighed on both supply and demand. Market sources reported that persistent shortages of iron ore fines and elevated raw material costs led to reduced availability and weaker trading activity across major regions.

Domestic pellet trade volumes decreased 27% m-o-m in August, with total recorded volumes reaching approximately 1.19 million tonnes (mnt), a notable rise from 1.63 mnt in July.

The PAN India pellet market experienced a decline in domestic sales, dropping by 25-50% compared to the previous month. According to BigMint data, only the Jamshedpur market reported an increase of approximately 70% in pellet trades, while trading volumes in other regions remain under pressure.

Market commentary

According to market participants, demand from the sponge iron and downstream steel sectors remained weak, forcing buyers to restrict their pellet purchases. “Most buyers were cautious and preferred only need-based procurement. With sponge and billet prices are under pressure, no one wanted to take large positions,” said an Odisha-based trader.

The market also remained subdued as several buyers had already booked aggressively in July, ahead of the monsoon, when offers were relatively more favourable. This left little appetite for fresh purchases in August. A buyer mentioned, “The July bookings absorbed much of the demand. August was unusually quiet.”

On the supply front, heavy rainfall disrupted iron ore production and dispatches, tightening fines availability and keeping prices firm. Pellet offers therefore remained elevated despite muted buying. A pellet producer noted, “With fines so scarce and costly, we had no room to adjust pellet prices lower, even when demand slowed.”

Adding to the supply crunch, a few pellet plants temporarily suspended sales during the month due to scheduled maintenance and raw material shortages.

While a handful of coastal bulk shipments marginally supported total trade volumes, they were not sufficient to offset the overall slump. Market participants expect trading to improve gradually in September as monsoon disruptions ease and downstream steel demand stabilize.

There were no pellet import shipments in August due to sufficient port stocks and aggressive bookings for September arrival cargoes on the western coast. Meanwhile, India’s pellet export volume recorded 0.17 million tons during the August.

Factors driving pellet trades

• Bids rise in OMC’s Aug’25 auction: In OMC’s iron ore fines auction of 1.493 (Fe 51-65%) on 19 Aug’25, around 1.472 mnt (98.6%) of fines were booked at INR 2,650-5,550/t, with premiums of INR 50-700/t over base prices. Bids (weighted average) rose by INR 300/t m-o-m. The hike in prices was led by the material shortage due to the heavy monsoon, which has impacted the production and dispatch of iron ore. Earlier, the miner had increased base prices by INR 300/t.
• PELLEX, prices in other regions rise m-o-m – BigMint’s monthly average domestic pellet index, PELLEX, increased by INR 750/t m-o-m in August to INR 10,200/t DAP Raipur. In Aug, prices in other regions increased by INR 400-850/t m-o-m, while remaining largely stable in Bellary, Durgapur and Kandla compared to last month.
• Sponge PDRI shown mixed trend : Sponge PDRI prices increased pan-India in August but prices showed a sharp downtrend in the second half of the month. PDRI prices saw a hike of INR 350/tonne (t) m-o-m to INR 24,100/t exw in Raipur. Other regions witnessed an uptrend of INR 200-600/t m-o-m in August. This kept pellet tags on the northern end and supported active demand for the raw material even after price hikes by suppliers.
• NMDC rake movements rise m-o-m: NMDC, India’s largest iron ore miner, dispatched 469 rakes from its Chhattisgarh mines in Aug, equivalent to 1.8 million tonnes (mnt) of iron ore. This was an increment of 11.1% compared to 422 rakes (1.62 mnt) in July, as per BigMint data.

Outlook

Domestic pellet trade volumes are expected to gain momentum in September, as a slow monsoon will ease the production and dispatch of iron ore. The anticipated improvement in the downstream steel market is also expected to support the pellet market, which may further balance the trading volume.