- Sluggish downstream demand prompts INR 200/t cut in sellers’ offers
- Competitive Odisha offers, subdued exports exert downward pressure
PELLEX, BigMint’s bi-weekly domestic pellet (Fe 63%) index for Raipur, fell by INR 100/t ($1/t) to 9,900/t ($103/t) DAP on 12 May (Tuesday) compared to 8 May. BigMint recorded deals for around 30,000 t, concluded at INR 9,700-9,800/t ($101-102/t) exw-Raipur by local pellet producers. The decline was driven by a downward revision in sellers’ offers amid limited deals, falling sponge iron and semi-finished steel prices, and weak buying interest from downstream sectors.
Rationale
- PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
- One (1) deal was recorded in this publishing window and was taken for calculation. Thus, the T1 trade category was accorded 50% weightage.
- Nineteen (19) firm offers, bids, and indicative prices were heard, and seventeen (17) were taken for price calculation and given the balance 50% weightage.
Trades and price movements
Local pellet producers reduced their offers by around INR 100-200/t during the week, with exw Raipur offers for 62.5-63% (+/-0.5%) grade material heard largely at INR 9,700-9,800/t DAP Raipur against the INR 9,900-10,000/t previously offered.
BigMint recorded deals for around 30,000 t, concluded at INR 9,700-9,800/t ($101-102/t) exw-Raipur by local pellet producers so far this week.
Some Odisha-based producers offered pellets (Fe 62.5-63%) to Raipur at INR 9,500-9,900/t ($99-104/t) DAP, but no deals were recorded in the last couple of days.
Market scenario
Market participants noted that demand from sponge iron manufacturers has weakened further, while buyers continued to maintain a highly cautious stance and restricted procurement largely to immediate consumption requirements. The continued fall in sponge iron and billet prices has impacted raw material buying activity across the region.
A Raipur-based seller commented, “Demand is currently very muted, and most buyers are avoiding bulk bookings. Even after offer reductions, enquiries are limited as market participants expect further correction in pellet prices.”
Sources indicated that although Odisha iron ore fines and pellet prices have also softened, reduced demand and weaker trade parity remain the bigger concern for sellers at present. Competitive offers from neighbouring regions continued to pressure the Raipur market, while subdued export prospects and cautious overseas sentiment further limited overall activity.
Another market participant stated, “Export parity has reduced significantly, and domestic demand is also shrinking. Most regional pellet markets are softening, which has pressured sellers across central India.”
Overall, the market remained under strong pressure amid a weak steel sector and sluggish transactions.
Key market drivers
- Sponge iron prices drop w-o-w: Sponge PDRI prices dropped by INR 450/t ($4.5/t) w-o-w to INR 25,400/t ($265/t) exw Raipur on 12 May. However, prices held stable d-o-d. Market sentiment was cautious, with procurement mainly limited to immediate requirements as buyers anticipated further price corrections.
- Billet prices fall by nearly INR 1,500/t w-o-w: BigMint’s billet index in Raipur decreased by INR 1,450/t ($14/t) w-o-w to INR 40,250/t ($421/t) exw on 12 May. Meanwhile, the index declined by INR 300/t d-o-d to INR 40,250/t exw ($420/t). Despite lower spot offers, buying interest remained weak, with transactions largely restricted to immediate requirements. Only a handful of spot deals were reported during the session as buyers refrained from aggressive bookings.
Outlook
Raipur’s pellet prices are likely to remain under pressure this week amid muted demand due to weak sponge iron and billet markets.
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