- Sponge prices fall INR 1,600-2,200/t m-o-m
- Absence of pellet bulk deals lead to drop in volume
India’s domestic pellet trade in India declined by around 16% in May compared to the previous month as weak steel market demand and limited activity weighed on buying sentiment. Steelmakers, grappling with falling sponge iron and semi-finished steel prices, held back on major pellet procurement, restricting purchases to immediate production needs.
The domestic pellet market recorded a drop of 16% m-o-m in trade volumes in May 2025, according to BigMint data. Total volumes stood at 1.14 million tonnes (mnt) against 1.36 mnt in April.
Market comments and sentiments
A steelmaker informed, “Steel prices dropped sharply through May, making it difficult to pass on raw material costs. This forced us to buy only what was essential for current operations.”
The decline in domestic demand coincided with elevated iron ore prices, which led to higher pellet production costs across key manufacturing regions. Barbil, one of the major production hubs, witnessed a sharp fall in trade volumes as producers faced selling pressure.
An Odisha-based supplier commented: “The cost of production increased due to firm ore prices, but buyers weren’t willing to match the offers. Many of us had to adjust margins to ensure liquidity.”
Despite the overall downturn, trade activity in some regions like Raipur, Jamshedpur, and Kandla remained relatively active. Plants in these areas operated continuously during May, recovering from earlier shutdowns in April. This operational consistency supported a modest rise in pellet offtake.
Meanwhile, the arrival of a few Middle Eastern pellet cargoes in western India added pressure on domestic prices. These imports offered competitive landed costs, drawing some buyers away from the local supply.
Factors driving pellet trades
- Bids drop OMC May auction: In OMC’s auction for 1.328 mnt of iron ore fines (Fe 55-65%) on 19 May’25, 0.508 mnt (38%) from different lots were booked at the base prices within the range INR 4,100-5,500/t ex-mines. Bids (weighted average) dropped INR 100/t m-o-m.
- Sponge PDRI falls m-o-m: Sponge PDRI prices significantly fell in the PAN India region in May, following the cautious buying and price pressure from the finished steel segments. PDRI prices saw a drop of INR 1,600/t m-o-m to INR 24,150/t exw in Raipur. Other key regions also witnessed a downtrend of INR 1,600-2,200/t m-o-m in May. This led to a sharp drop in pellet offers and created a low demand sentiment in the market.
- Pellet exports stable m-o-m: BigMint’s India pellet (Fe 63%, 3% Al) export index (FOB east coast) is largely stable m-o-m at $93/t in May. Spot pellet export deals from the east coast were absent in the last month amid weak response from seaborne buyers, along with a disparity in bid offers.
M-o-m pellet trade comparison
PELLEX, indices down m-o-m
BigMint’s monthly average domestic pellet index, PELLEX, decreased by INR 550/t m-o-m in May to INR 9,600/t DAP Raipur. Pellet prices remained under pressure following offers reduction by local producers amid the competitive offers from Odisha and a sharp decline in sponge prices. In the other regions, pellet prices decreased by INR 150-600/t m-o-m.
Outlook
Market participants expect improved trading activity in June, supported by seasonal stocking ahead of the monsoon and some anticipated large-volume tenders by giant steelmakers. A trader mentioned on this, “We are hopeful that demand will pick up in June as mills look to secure material before monsoon-related disruptions affect logistics.”
As per BigMint analysis, while May was marked by caution and reduced trades, the outlook for June appears more optimistic, with seasonal and institutional demand likely to provide support.
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