India’s domestic pellets market saw a significant 75% m-o-m rise in trade volumes to 745,400 tonnes (t) in September compared to 425,400 t in August, as per SteelMint data.
This sharp increase in trade volumes came as offers floated by the sellers were on the lower side due to limited buying at high levels. Limited iron ore/pellets inventory with steelmakers (as they resisted buying at higher offers in the previous month) also supported pellets buying in September.
Moreover, steelmakers found pellets cheaper compared to iron ore even as NMDC’s ore prices were stable in September.
Pellet prices drop m-o-m
Pellets prices across key markets dropped by up to 10% m-o-m in September, SteelMint’s data shows.
Piling up of inventory with sellers due to limited buying at high prices weighed on pellets offers. The drop in sponge iron offers in the first half of September and low finished steel sales also dragged down pellets prices.
SteelMint’s pellet index, PELLEX, also dropped by 8% m-o-m to INR 8,160/t DAP Raipur in September.
Outlook
Sources opined that pellets prices have largely bottomed out and there is little scope for any significant correction.
SteelMint expects that a recovery in steel demand, especially from the infrastructure and automobile sectors, before the upcoming Diwali festival, is likely to support iron ore and pellets prices in the near-term. However, a sharp rise in pellets prices would be capped by improving iron ore supply.
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