India: PELLEX falls by INR 200/t ($2/t) on weak downstream demand

• OMC fines bids dropped INR 300/t ($3/t) m-o-m in Apr e-auction
• Sales pressure led to a reduction in Raipur pellet offers by INR 200/t

Pellet prices in the Raipur region declined by INR 200-300/t ($2-3/t) in recent days on 21 April, reflecting mounting pressure from the semi-finished steel segment and weaker iron ore trends observed in the latest OMC auction. The downturn highlights the continued imbalance across the steel value chain, where falling downstream prices are influencing raw material procurement strategies.

Trades and price movements

PELLEX, BigMint’s bi-weekly domestic pellet (Fe 63%) index for Raipur, fell by INR 200/t to INR 10,400/t ($112/t) DAP on Tuesday compared to 17 April. BigMint recorded deals for around 10,000 t, concluded at INR 10,200-10,300/t ($110-111/t) exw-Raipur by local pellet producers.

Raipur-based producers cut offers for Fe 62.5/63% (+/-0.5%) pellets by INR 200/t ($2/t) to INR 10,200-10,300/t ($110-111/t) exw today. The decline in offers followed the recent drop in iron ore fines bids in OMC’s auction by INR 250-300/t m-o-m, along with weaker downstream demand and prices. Few Odisha-based pellet producers offered pellets (Fe 62.5-63%) to Raipur-based buyers at INR 9,900-10,400/t DAP Raipur, but no deals were recorded in the last couple of days.

Market dynamics

Market participants indicated that the softer bids recorded in the OMC auction played a key role in shaping sentiment. A Raipur-based supplier noted that “Bids came in lower than previous offer levels, which created a ripple effect in the local pellet market. This forced sellers to revise their offers downward, although actual deal activity remained limited even after the price correction.”

Adding to the pressure, sponge PDRI and billet prices in the central India region have continued their downward trajectory. According to a pellet producer, “Earlier pellet price levels were no longer viable for buyers, especially with sponge iron margins shrinking.” As a result, procurement has largely shifted to a need-based approach, with buyers avoiding bulk purchases.

Competition from Odisha-based suppliers has also intensified. Several producers attempted to offer pellets in the Raipur market at more competitive rates; however, these offers failed to translate into concluded deals. A trader explained that “buyers are cautious and waiting for clearer price signals before committing, despite attractive offers in the market.”

Further weakness in fines prices during the OMC auction, coupled with sustained pressure on billet and sponge iron prices, has reinforced the bearish outlook for pellets. Some sellers have responded by temporarily withholding fresh offers, choosing instead to monitor market movements before re-entering with revised pricing strategies.

On the demand side, buyers remain in a wait-and-watch mode. A steelmaker commented, “There is no urgency to procure at the moment; we expect more clarity in the coming days as the market stabilizes.”

Some transactions are expected at current price levels mid-week; however, aggressive buying interest seems unlikely in the near term.

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 taken for calculation. Thus, the T1 trade category was accorded 50% weightage.
• Fifteen (15) firm offers, bids, and indicative prices were heard, and eleven (11) were taken for price calculation and given the balance 50% weightage.

Key market drivers

• Sponge iron prices fall w-o-w: Sponge PDRI prices dropped by INR 500/t ($5/t) w-o-w to INR 25,950/t ($278/t) exw Raipur on 21 April amid weak demand. Weak demand in the finished steel segment remained the key factor behind the continued decline in sponge iron prices, exerting sustained pressure on the market. Buying activity across both finished and semi-finished steel stayed sluggish, with only a few deals concluded. Buyers largely remained on the side lines, restricting procurement to immediate needs, which kept overall market sentiment cautious and trading activity subdued.
• Billet prices drop w-o-w: BigMint’s billet index in Raipur declined by INR 300/t ($3/t) w-o-w to INR 42,250/t ($452/t) exw on 21 April. Market activity remained subdued from the beginning of the session, with limited enquiries and cautious participation from buyers. Despite reduced spot offers, buying interest remained weak, largely due to sluggish finished steel demand over the past few days. Buyers continued to adopt a wait-and-watch approach, delaying fresh bookings until clearer demand signals emerge.

Outlook

According to BigMint’s analysis, pellet prices are expected to remain at current levels throughout the week, with only moderate trading activity as market participants navigate ongoing volatility.