- Sharp decline in sponge iron prices keeps buyers cautious
- Export activity remains stagnant on weak Chinese demand
India’s domestic pellet trade volume recorded a marginal 3% decline in October compared to the previous month, as most regional markets witnessed a slowdown in buying activities. The dip was largely driven by weak steel market sentiment, subdued demand from sponge iron units, and the impact of festive holidays, which collectively softened trading momentum across the country.
Total volumes recorded by BigMint reached approximately 1.26 million tonnes (mnt), a notable rise from 1.3 mnt in September.
According to data, pellet trade volumes fell in all major regions, except Barbil and Kandla, where buyers maintained trading activity. Notably, Raipur saw a sharp 65% drop in trading volume against September, reflecting muted demand from local sponge iron units.
Market commentary
A pellet supplier noted, “Demand was sluggish throughout October, with producers receiving fewer inquiries. Sponge iron and semi-finished steel prices remained under pressure, and most mills operated at reduced production rates due to weak margins.”
Despite the overall slowdown, the market found some support from bulk tenders concluded by south Indian pellet producers, which helped offset part of the domestic volume loss.
Iron ore prices on the east coast were higher, which kept pellet production costs elevated. This also limited the decline in pellet offers, as margins were tight.
On the international front, pellet exports remained largely subdued, with only a couple of Indian suppliers offering cargoes during the month. Meanwhile, pellet imports were recorded at around 140,000 t, stable on a m-o-m basis.
A trader said, “Export activity was nearly stagnant in October. Chinese buying interest was weak, and Indian suppliers preferred to wait for clearer price signals before offering significant volumes.”
Looking ahead, industry participants expect a notable improvement in November, supported by seasonal demand and expectations of increased bulk procurement by steel and sponge iron makers. A prominent producer said, “We anticipate better trading momentum in November as downstream steel market conditions are showing early signs of stabilisation.”
Factors driving pellet trades
- Bids firm up in OMC’s Oct’25 auction: In OMC’s iron ore fines auction for 1.871 mnt (Fe 51-62%) on 17 October, around 1.82 mnt (97%) were booked at INR 2,500-5,700/t. Bids (weighted average) rose marginally, by INR 50/t m-o-m. The stability in bids was due to material shortages amid lower production volumes due to the extended monsoon.
- PELLEX decreases m-o-m: The monthly average domestic pellet index, PELLEX, dropped by INR 125/t m-o-m in October to INR 10,150/t DAP Raipur. Pellet offers declined in the second half of the month, following a reduction in iron ore prices. Competitive pellet offers from Odisha also put pressure on Raipur’s local prices. In October, pellet prices in other regions decreased by INR 100-200/t m-o-m. Kandla, however, was an exception, recording an increase.
- Sponge PDRI slips m-o-m: Sponge PDRI prices fell by INR 1,200/t m-o-m to INR 22,900/t exw in Raipur in October 2025. India’s sponge iron market sentiment in October remained weak to range-bound, despite improvements in trading activity across a few regions. Prices declined by INR 500-1,600/t m-o-m, influenced by weak semi-finished and finished steel markets.
- NMDC rake movements rise m-o-m, y-o-y: NMDC dispatched 551 rakes from its Chhattisgarh mines in October, equivalent to 2.12 million tonnes (mnt) of iron ore. This was an increment of 25% compared to 440 rakes (1.69 mnt) in September, as per BigMint data. On a y-o-y basis, October 2025 recorded an 8.9% rise in dispatches compared with 506 rakes in October 2024.
Outlook
Domestic pellet trade is expected to rise in November, with sentiment remaining cautiously optimistic, with participants awaiting stronger demand from the steel producer to drive a meaningful rebound in pellet trading activity.
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