India: Pellet trade rises over 40% m-o-m in Jul’25 amid strong domestic demand

• Monsoon tightens iron ore supply, boosting pellet trades
• Sponge iron prices increase by INR 300-1,000/t m-o-m

India’s domestic pellet market witnessed a significant 43% surge in trading activity in July 2025, with total recorded volumes reaching approximately 1.63 million tonnes (mnt), a notable rise from 1.14 mnt in June. The uptick was primarily driven by seasonal monsoon demand and supportive downstream market sentiment, encouraging buyers to opt for raw pellets over iron ore lumps.

While certain regions, such as Bellary (+74%), Barbil (+70%), Raipur (+50%), Jharsuguda (+114%), and Jamshedpur (+43%), experienced firm demand and steady volumes, only the Durgapur region witnessed a 24% drop in trades.

Market commentary

Key regions such as Raipur, Barbil, and Bellary posted a sharp increase in trading activity. Market participants attributed this to buyers preferring pellets, which offer better performance and handling advantages during the monsoon season. A steelmaker informed BigMint, “Due to excessive rainfall, iron ore lump availability and handling were challenging, which made pellets the preferred choice.”

Adding to this, pellet producers chose to focus on the domestic market over exports due to better price realisations. A pellet manufacturer from eastern India noted, “Domestic trades offered higher margins than exports this month. With disruptions in rake availability and lower iron ore production, domestic demand for pellets remained strong.”

The shortage of iron ore caused by disrupted mining operations and logistical hurdles during the monsoon tightened supply, boosting pellet trade volumes. Additionally, a mid-month rally in downstream steel and semi-finished product prices supported buying interest.

Another market participant highlighted, “The demand for raw pellets was strong during the month, as steel producers were unable to restock on dry days. The preference for pellets over lumps, combined with a shortage of iron ore fines in the market, supported both prices and volumes in July.”

Meanwhile, some pellet plants also received approvals for expansion in FY’25, creating optimism for increased capacity and future supply stability. Overall, July marked a bullish phase for India’s pellet market, driven by robust demand and constrained supply.

In July, India imported approximately 0.29 mnt of pellets, primarily from the Middle East. Meanwhile, India’s pellet export volume reached 0.22 mnt during the same month.

Factors driving pellet trades

• Bids rise in OMC’s Jul’25 auction: In OMC’s auction for 1.348 mnt of iron ore fines (Fe 51-65%) on 19 July, 1.304 mnt (97%) were booked at INR 2,550-5,350/t ex-mines, with a premium of INR 50-850/t. Bids (weighted average) increased by INR 150/t m-o-m. Earlier, OMC had lifted base prices by INR 150/t m-o-m for some lots. Limited availability of iron ore due to the monsoon and a rise in pellet prices supported bids in the fines auction.
• Sponge PDRI rises m-o-m: Sponge PDRI prices increased pan-India in July, amid positive market sentiments and a sharp gain in the last couple of weeks. PDRI prices saw a hike of INR 900/tonne (t) m-o-m to INR 23,750/t exw in Raipur. Other regions witnessed an uptrend of INR 300-1,000/t m-o-m in July. This kept pellet tags on the northern end and supported active demand for the raw material even after price hikes by suppliers.
• Pellet export offers firm up m-o-m: BigMint’s India pellet (Fe 63%, 3% Al) export index (FOB east coast) rose by $5/t m-o-m to $95/t in July. However, export deals were largely absent from the east coast of India, further supporting domestic trade volume. Meanwhile, some low-alumina pellet export tenders received active bids in the latter half of July.
• NMDC rake movements drop m-o-m: NMDC, India’s largest iron ore miner, dispatched 422 rakes from its Chhattisgarh mines in July, equivalent to 1.62 million tonnes (mnt) of iron ore. This was a drop of 12.3% compared to 481 rakes (1.85 mnt) in June, as per BigMint data.

M-o-m pellet trade comparison

PELLEX, prices in other regions rise m-o-m

BigMint’s monthly average domestic pellet index, PELLEX, increased by INR 250/t m-o-m in July to INR 9,450/t DAP Raipur. Active demand in July pushed up pellet prices, which were also supported by iron ore fines shortages and a rise in sponge iron and semi-finished steel tags in the second half.

In July, prices in other regions increased by INR 250-850/t m-o-m, while in Bellary, tags dropped by INR 250/t compared to last month.

Outlook

Domestic pellet trade volumes are expected to stay strong in August due to a weaker export market and ongoing rainfall across India, which may continue to hamper iron ore supply.