India: PELLEX remain stable in recent trades, sponge prices decline w-o-w

• Need-based trading activity by Raipur players
• Sharp fall in semi finished steel prices w-o-w

Pellet prices in the Raipur region remained largely stable in the week ended 24 March, with market activity reflecting a cautious and subdued sentiment among participants. Trading volumes were moderate, but overall demand for pellets showed signs of softening, as buyers refrained from aggressive procurement at prevailing price levels.

Trades and price movements

PELLEX, BigMint’s bi-weekly domestic pellet (Fe 63%) index for Raipur, remained stable at INR 10,800/t DAP on Monday, compared to Friday, reflecting softer market conditions.

Offers for Fe 62.5-63% (+/-0.5%) grade pellets were heard lower at INR 10,600-10,800/t exw Raipur, translating to around INR 10,850/t DAP. Around 36,000 t were recorded at INR 10,600-10,700/t exw Raipur by local pellet sellers.

Market dynamics

Market participants noted that buyers are currently adopting a wait-and-watch approach, primarily due to sufficient inventory levels and limited immediate requirements. While some need-based purchases continued, particularly for short-term operational requirements, bulk buying interest remained weak. A steelmaker commented, “Most buyers are not willing to commit at current prices. They are only procuring material on an urgent basis, which is restricting overall market movement.”

Sellers, on the other hand, maintained their offer levels despite the slowdown in inquiries. However, the lack of strong buying interest has resulted in fewer deal closures. A pellet manufacturer highlighted, “We are keeping our prices unchanged, but inquiries have definitely slowed down. The market lacks momentum, and buyers are not showing urgency.”

Another key factor impacting pellet demand is the availability of alternative raw materials. Several buyers reportedly procured iron ore lumps from neighboring regions in recent weeks, reducing their dependence on pellets. This shift in procurement strategy has further dampened pellet demand in the Raipur market.

Additionally, the approaching fiscal year-end has contributed to cautious buying behavior. Many companies have already finalized their order books and are focusing on inventory management rather than fresh procurement. An industry source mentioned, “We have adequate raw material inventory at the moment, and with the financial year closing, most participants are not looking to build additional stocks.”

Looking ahead, market participants expect pellet prices to remain volatile in the near term. While no major price correction is anticipated immediately, sporadic, need-based trades are likely to continue influencing price trends. The market direction will largely depend on post fiscal-year demand revival and fresh procurement cycles.

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
• Four (4) deals were recorded in this publishing window, and taken for calculation. Thus, the T1 trade category was accorded 50% weightage.
• Ten (10) firm offers, bids, and indicative prices were heard and nine (9) were taken for price calculation and given balance 50% weightage.

Key market drivers

• Sponge iron prices decline w-o-w: Sponge PDRI prices fell by INR 150/t w-o-w to INR 25,750/t exw Raipur, reflecting weak buying interest and cautious sentiment. Sponge iron prices in Raipur also dropped by INR 150/t d-o-d, as constrained buying and competitive offers exerted additional pressure. The correction in DRI prices partially cushioned billet margins, though overall demand conditions remained fragile.
• Billet prices down w-o-w: BigMint’s billet index in Raipur dipped by INR 400/t w-o-w; buoyed by slower response from buyers. In contrast, prices declined by INR 400/t d-o-d to INR 40,850/t ex-works on 24 March. Despite reduced spot offers, buying interest remained limited. Participants adopted a cautious approach, awaiting clearer signs of recovery in finished steel offtake before proceeding for additional billet bookings. Weak cues from neighbouring markets and persistent pressure in the finished steel segment further dampened sentiment, keeping the overall sentiments bearish.

Outlook

Pellet prices in Raipur are expected to remain under pressure in the near term with some pockets of trades may conclude by the local pellet sellers.