India: PELLEX remains stable amid subdued buying interest

• Sponge iron, billet prices fall INR 1,150/t w-o-w
• Few pellet plant keep sale closed this week

Pellet prices in Raipur continued to remain under pressure in the week ended 27 February amid subdued trading activity and weak buying interest from local consumers. Market participants reported that demand from sponge iron and semi-finished steel producers has sharply declined, weighing on overall sentiment in the region.

Trades and price movements

PELLEX, BigMint’s bi-weekly domestic pellet (Fe 63%) index for Raipur, remained stable at INR 10,500/tonne (t) ($116/t) DAP on 27 February compared to the previous assessment on 24 February. Around 10,000 t of pellets (Fe 62.5%) were traded in the market at INR 10,500/t ($116/t) exw-Raipur.

Raipur-based pellet producers kept offers stable for Fe 62.5-63% (+/-0.5) grade pellets at INR 10,400-10,500/t ($115-116/t) exw. Recent sharp decreases in sponge iron and billet prices made buyers cautious, further impacting the trading volume of pellets in Raipur.

Market dynamics

According to steelmakers, while sponge iron and billet prices have corrected significantly over the past week, pellet offers have largely remained unchanged. A sponge iron producer said, “The current pellet offers are not aligned with the falling semi-finished steel market. Cost economics are not supporting fresh procurement at these levels.”

Buyers are therefore adopting a cautious approach and refraining from concluding new deals. Several steelmakers indicated that they are currently operating on previously procured raw material inventories. “We have sufficient stock purchased earlier at comparatively workable levels. There is no urgency to enter into fresh contracts at the prevailing offers.”

Some buyers are also exploring iron ore lumps as an alternative feed option, as the relative price equation has turned more favorable compared to pellets.

On the supply side, pellet producers are maintaining their offer levels and waiting for counter-bids from buyers. a pellet supplier stated, “We are holding our prices for now and assessing market direction. Input costs and production economics do not justify aggressive discounts at this stage.”

However, a few suppliers reportedly kept their sales closed during the week, limiting spot activity. Despite the overall slowdown, limited pockets of trade were concluded by certain sellers at negotiated levels.

Market participants expect a potential correction in pellet prices in the coming days if demand remains muted.

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
• One (1) deal was recorded in this publishing window, and was not taken for calculation. Thus, the T1 trade category was accorded 0% weightage.
• Eleven (11) firm offers, bids, and indicative prices were heard. Nine (9) were taken for price calculation and given balance 100% weightage.

Key market drivers

• Sponge iron prices fall w-o-w: Sponge iron prices declined by INR 1,150/t ($12-13/t) w-o-w on 27 February to INR 25,800/t ($283/t) exw-Raipur. Prices in Raipur decreased by INR 300/t d-o-d. Despite reduced spot offers, buying interest remained subdued. Participants adopted a cautious stance, awaiting clearer signs of recovery in finished steel offtake before committing to fresh billet bookings. Weak cues from neighbouring markets and persistent pressure in the finished steel segment further dampened sentiment, keeping the overall tone bearish.
• Billet prices decline w-o-w: BigMint’s billet index decreased by INR 800/t ($8/t) w-o-w to INR 39,750/t ($434/t) exw-Raipur. Meanwhile, prices declined by INR 200/t d-o-d today. Despite reduced spot offers, buying interest remained subdued. Participants adopted a cautious stance, awaiting clearer signs of recovery in finished steel offtake before committing to fresh billet bookings. Weak cues from neighbouring markets and persistent pressure in the finished steel segment further dampened sentiment, keeping the overall tone bearish.

Outlook

Pellet prices in Raipur will get a correction with the upcoming Holi festival approaching, some deals may be finalized as buyers look to secure material at adjusted levels before the holiday period.