SteelMint

India: PELLEX falls by INR 100/t ($1/t) in recent trades

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by

Ratiram Gurjar
in
  • Need-based buying seen as sellers maintain offers
  • Market awaits OMC auction result for price clarity

Pellet prices in Raipur witnessed a marginal decline in the latter half of the week, as market activity remained subdued. Transactions were limited, with a few recorded at lower levels. This drop was largely driven by select pellet producers trying to liquidate existing inventories at lower prices.

PELLEX, BigMint’s bi-weekly domestic pellet (Fe63%) index for Raipur, dropped by INR 100/tonne (t) ($1/t) to INR 9,700/t ($113/t) DAP Raipur on 16 May compared to the previous assessment on 13 May. Raipur-based pellet producers kept offers for Fe 63% (+/- 0.5%) stable at INR 9,600-9,700/t ($112-113/t) exw. However, deals took place at lower prices, with around 15,000 t heard traded at INR 9,500-9,600/t ($111-112/t) exw.

Pellet offers (Fe 62.5-63%) from Odisha for Raipur-based buyers were heard at INR 9,000-9,600/t ($105-112/t) DAP, and transactions were absent in the last couple of days.

A Raipur-based market participant stated, “Some plants have started to offload material at lower prices due to weak demand and consistent selling pressure. This has dragged down the overall sentiment in the local market, further leading to deals at lower prices.”
Meanwhile, some suppliers maintained their offers, adopting a wait-and-watch approach ahead of the upcoming iron ore auction by the Odisha Mining Corporation (OMC), scheduled for next week.
A local seller noted, “We expect clarity on future price direction from the OMC auction. Any revisions to our offers will be made next week, following the OMC bids. We sold some material at discounted prices, but we are keeping the same offers for now.”
Local buyers, meanwhile, made bookings only to meet immediate needs, with only a few pockets of trade activity noted. Notably, deals were absent between Odisha-based sellers and Raipur-based buyers this week, indicating restrained procurement interest on this channel.
Furthermore, sponge iron and semi-finished steel prices remained range-bound w-o-w, offering minimal support to pellet tags. The market now looks towards the outcome of the OMC auction, which is likely to shape price revisions and trading dynamics in the coming days.

Rationale

  • PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
  • Two (2) deals were reported so far in this publishing window, and both were taken for calculations. The T1 trade category was accorded 50% weightage.
  • Eighteen (18) firm offers, bids, and indicative prices were heard. Fourteen (14) were taken for price calculation and given the balance 50% weightage.

Factors impacting pellet prices

  • Sponge iron tags unchanged w-o-w: P-DRI prices remained stable d-o-d at INR 24,200/t ($283/t) exw-Raipur on 16 May. Meanwhile, prices were unchanged w-o-w. Purchase activity was low, as buyers were satisfied with previous bookings. They also showed reluctance to rising prices, expecting future declines.
  • Billet prices dip w-o-w: Billet prices in Raipur inched down by INR 50/t ($0.5/t) d-o-d to INR 39,850/t ($466/t) exw today. W-o-w, prices inched down by INR 150/t ($2/t). Deals were muted in today’s trading session.

Outlook

As per BigMint’s analysis, market direction is expected to become clearer following the OMC auction. Steelmakers are waiting for the auction outcome, which will provide a clearer picture regarding future pellet offers and trades.

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