India: PELLEX falls by INR 150/t ($2/t) following revised offers, OMC auction bids

• Raipur offers down by INR 200/t ($2.5/t)
• Active trade seen at revised offers 

Pellet prices in the Raipur region witnessed a notable decline over the past few days, as market activity adjusted to revised offers and muted demand. Notably, pellet producers in Raipur reduced their offers by INR 200/t ($2.5/t) over the weekend, reflecting the subdued sentiment in both raw material and finished steel markets.

PELLEX, BigMint’s bi-weekly domestic pellet (Fe63%) index for Raipur, dropped by INR 150/tonne (t) ($2/t) to INR 9,550/t ($111/t) DAP Raipur on 20 May compared to the previous assessment on 16 May. Raipur-based pellet makers have dropped their pellet offers for Fe 62.5/63%(+/_0.5%) by INR 200/t ($2.5/t) to INR 9,300-9,500/t ($109-111/t) exw-Raipur on 17 May.

Around 57,500 t of pellet deals were concluded by Raipur sellers at the revised offers of INR 9,300-9,500/t ($109-111/t) exw. Meanwhile, 5,000 t of pellets were booked by Raipur buyers at INR 9,300/t ($109/t)DAP from Odisha suppliers. Buyers actively booked required material at the lower offers, which further led to rise in trade activity in this publishing window.

Pellet offers (Fe 62.5-63%) from Odisha for Raipur-based buyers were heard at INR 9,000-9,500/t ($105-111/t) DAP, and transactions were limited in the last couple of days.

As per sources, ” The fall in offers from Odisha is also pressuring local prices. There have been a few trades in recent days, but volumes remain limited.”

The correction in prices comes on the back of falling bids in the recent Odisha Mining Corporation (OMC) iron ore fines auction, where a majority of the offered quantity remained unsold. This has further weakened the demand outlook, which may reflect in the ongoing week.

In OMC’s auction for 1.328 mnt of iron ore fines (Fe 55-65%) on 19 May, 0.508 mnt (38%) from different lots were booked at the base prices within the range of INR 4,100-5,500/t ($48-64/t) ex-mines. Bids (weighted average) dropped by INR 100/t m-o-m.

A seller informed, “Buyers are taking a cautious approach and making purchases only on need basis. We concluded a few deals at revised rates, including some to buyers outside the Raipur region. Trades had improved at the fresh offers in the last couple of days.”

Meanwhile, the sponge iron and billet markets have largely remained range-bound, further keeping buyers away from bulk trades.

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
• Five (5) deals were reported so far in this publishing window, and four (4) were taken for calculations. The T1 trade category was accorded 50% weightage.
• Fifteen (15) firm offers, bids, and indicative prices were heard. Eleven (11) were taken for price calculation and given a balance of 50% weightage.

Factors impacting pellet prices

• Sponge iron tags up d-o-d: P-DRI prices increased by INR 200/t ($2.5/t) d-o-d to INR 24,350/t ($285/t) exw-Raipur on 20 May. Meanwhile, prices rose by INR 150/t ($2/t) w-o-w. Today, market participants conducted limited procurement because of the increase in price and bookings yesterday.
• Billet prices rise d-o-d: Billet prices in Raipur climbed up by INR 200/t ($2.5/t) d-o-d to INR 40,000/t ($467/t) exw today. W-o-w, prices inched up by INR 100/t ($1/t). Trade activity was moderate in today’s trading session in Raipur.

Outlook

As per BigMint’s analysis, pellet prices in central India are likely to remain under pressure in the near term. Market participants expect need-based buying to continue as steelmakers remain cautious amid market uncertainties and subdued end-user demand.