India: PELLEX largely stable amid slight recovery in sponge offers w-o-w

• Sponge PDRI, billet prices up w-o-w
• Pellet trades cautious amid need based buying

PELLEX, BigMint’s bi-weekly domestic pellet (Fe 63%) index for Raipur, inched down by INR 50/t to INR 9,500/t ($100/t) DAP on 29 May (Friday) against 26 May. However, outside Raipur offer is still competitive for the sponge makers. Though a small quantity deal also got concluded.

Pellet prices in the Raipur region range-bound this week after a fall in offers, although limited trade activity emerged following a slight recovery in sponge iron and billet prices over the past few days. Market participants noted that while sentiment has improved marginally from last week’s subdued levels, the market continues to maintain a cautious undertone.

Buyers largely remained watchful after the steep correction in pellet prices seen over recent weeks, restricting fresh procurement activity. The overall market tone remained slightly bearish, with participants closely monitoring downstream demand and price movements before taking major positions.

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
• Only one (1) deal was recorded in this publishing window, but considered an outlier and was thus not taken for calculation. Thus, the T1 trade category was accorded 0% weightage.
• Seventeen (17) firm offers, bids, and indicative prices were heard, and thirteen (13) were taken for price calculation and given the balance 100% weightage.

Trades and price movements

Pellet manufacturers in Raipur kept stable offers for Fe 62.5/63% (+/-0.5%) grade pellets at INR 9,400-9,500/t ($98-99/t) exw. Meanwhile, only marginal deals of 5,000 t pellets were heard at the discounted prices landed from Odisha amid the weaken liquidity in Raipur market.

Local pellet suppliers maintained their current offers amid expectations that downstream steel markets may gradually stabilize. However, buyers hesitated from any further fresh purchases, expecting any worse price drops to see in future sessions.

Market scenario

Market participants said buyers are currently quoting very low bids to secure maximum discounts, resulting in a noticeable bid-offer disparity in the Raipur pellet market. According to sources, some deals were concluded at discounted levels compared to prevailing offers, mainly for inventory liquidation and immediate cash flow requirements. However, the recovery in the semi-finished steel segment has not been strong enough to improve confidence significantly, keeping the overall market sentiment cautious.

A Raipur-based pellet seller stated, “We are maintaining current offer levels after the slight improvement in sponge iron and billet prices over the last couple of days. However, buyers are still reluctant to book aggressively, and demand remains largely requirement-based.”

Market participants added that the sharp correction in pellet prices over the recent weeks has started to improve buying interest at lower levels. If sponge iron and semi-finished steel prices continue to recover in the coming days, additional trades may emerge in the local market.

Key market drivers

• Sponge iron prices edge up w-o-w: Sponge PDRI prices recovered slightly by INR 350/t ($3.5/t) w-o-w to INR 25,100/t ($261/t) exw Raipur on 29 May. Weak participation and subdued trading activity continued to prevail in the market, while buying activity remained restricted to need-based procurement, largely at lower price levels. The finished steel segment also reflected similar weakness, with dull demand and no major bulk bookings.
• Billet prices inches up w-o-w: BigMint’s billet index in Raipur rose by INR 500/t ($5/t) w-o-w to INR 39,300/t ($414/t) exw on 29 May. Meanwhile, the index rose by INR 100/t ($1/t) d-o-d. The market opened on a positive note, with sellers raised spot offers slightly during the day. However, higher billet offers failed to receive adequate support from buyers, as weak finished steel demand continued to limit enquiries in the semis market. Buyers largely maintained lower bids, resulting in range-bound sentiment and opportunity-based trading throughout the session.

Outlook

As per BigMint analysis, for the near term, pellet prices in the Raipur market are expected to remain largely stable supported by steady offers but capped by cautious buying sentiment.