India: PELLEX rises by INR 100/t ($1/t) amid hike in pellet offers

• Raipur-based sellers increase pellet offers by INR 100/t
• Weakening sponge iron, billet prices cap trade activity

Pellet prices in Raipur increased marginally by around INR 100/tonne (t) in recent days following a fresh round of price hikes by local producers. This followed gains in sponge iron (PDRI) and semi-finished steel prices last weekend, which provided temporary support to sentiment. However, a drop in sponge iron and billet prices in recent days weighed on trade activity.

Price movements, trades

PELLEX, BigMint’s bi-weekly domestic pellet (Fe63%) index for Raipur, rose by INR 100/t ($1/t) to INR 9,500/t ($106/t) DAP on Friday compared to the previous assessment on 23 December. Deals for around 15,000 t of pellets were concluded by Raipur-based sellers at INR 9,400-9,500/t ($105-106/t) exw.

Raipur-based pellet producers increased offers for Fe 62.5% (+/-0.5) pellets by INR 100/t ($1/t) to INR 9,300-9,400/t ($104-105/t) exw. Meanwhile, producers such as Godawari recently raised prices by INR 100/t ($1/t) to INR 9,500/t ($104/t) and 10,700/t ($119/t) exw for Fe 62.5% and Fe 64.5% material, respectively. The sudden spike in sponge iron and finished steel offers led to a hike in pellet prices.

Meanwhile, some Odisha-based sellers offered material at higher levels of INR 9,650-10,100/t ($108-113/t) DAP in Raipur.

Market scenario

Trade activity remained moderate at the revised offers. Buyers were largely cautious, booking need-based quantities, while several market participants had already secured material at earlier prices, which limited fresh spot buying.

A market participant said, “The hike was expected after the improvement in sponge iron and billet prices last weekend. However, buying remains selective, as many buyers are still carrying inventory booked at lower prices.”

Market participants further noted that overall activity slowed in the last couple of days, primarily due to a weakening trend in the sponge iron market, which impacted downstream confidence. However, participants remain optimistic about a revival in trading interest.

Another source stated, “The market was slow recently due to the softness in sponge iron prices, but we expect trades to pick up again over the next couple of days once downstream market trends become clearer.”

Meanwhile, no trades by Odisha-based pellet sellers were heard to have occurred in the Raipur market, as competitive pricing from local producers made it difficult for outside suppliers to place material.

A pellet producer shared, “Local offers are more competitive at the moment. We are receiving inquiries at the revised prices, and we expect some bulk deals to conclude shortly.”

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 recorded in this publishing window, and one (1) was taken for calculation. Thus, the T1 trade category was accorded 50% weightage.
• Ten (10) firm offers, bids, and indicative prices were heard. Seven (7) were taken for price calculation and given a balance of 50% weightage.

Key market drivers

• Sponge iron prices rise w-o-w: Sponge iron prices rose by INR 250/t ($3/t) w-o-w on 26 December to INR 23,150/t ($258/t) exw-Raipur. However, prices fell by INR 100/t ($1/t) d-o-d. Market participants remained cautious, and most buyers limited enquiries to immediate requirements amid uncertainty over price direction.
• Billet prices surge w-o-w: BigMint’s billet index increased by INR 350/t (3.5/t) w-o-w to INR 37,700/t ($421/t) exw-Raipur on 26 December. Meanwhile, prices dropped by INR 100/t (1/t) d-o-d. Trading activity was sluggish throughout the session. Most buyers were inactive, and the market lacked momentum, with only marginal need-based buying observed. Additionally, a large section of participants remained in holiday mode, while previously booked material was under dispatch, further restricting fresh enquiries and demand.

Outlook

According to BigMint’s analysis, pellet prices in the Raipur region will remain stable. Market sentiment is likely to remain cautious, with trading activity expected to improve in the near term, depending on movements in sponge iron and semi-finished steel prices.