India: PELLEX falls by INR 200/t ($2/t) as local pellet plants slash offers

• Sellers’ price cuts fail to boost demand substantially
• Falling sponge iron, billet prices keep buyers cautious

Pellet prices in the Raipur region declined in the last four days, primarily driven by muted buying interest and a sharp correction in downstream steel prices. A fall in sponge iron and billet prices pushed pellet suppliers to revise their offers downward, though buying activity remained subdued.

Price movements, trades

PELLEX, BigMint’s bi-weekly domestic pellet (Fe63%) index for Raipur, fell by INR 200/t ($2/t) to INR 9,450/t ($105/t) DAP on 9 December compared to the previous assessment on 5 December. Limited demand was recorded during the assessment period. Around 24,000 t of pellets (Fe 62.5-63%) were sold by local suppliers at INR 9,300-9,600/t exw Raipur at the revised offers.

Raipur-based pellet producers reduced their offers for 62.5/63% (+/-0.5%) material by INR 300/t ($3.5/t) to INR 9,300-9,600/t ($103-106/t) exw recently. Sources indicate that selling pressure on pellet producers contributed to this price drop. This was due to lower buying interest from steelmakers and a preference for DRCLO as raw material feed.

Meanwhile, some Odisha-based sellers offered material in Raipur at INR 9,500-10,000/t DAP.

Market scenario

Market participants noted that buyers were hesitant to enter into deals at fresh offers, citing uncertainty around price stability. “Steel prices are falling every other day. Buyers are not confident about concluding deals at the current pellet rates,” added a market player.

Many steelmakers also indicated that their raw material inventory remains slightly sufficient. Additionally, some sponge producers continue to rely on DRCLO, considering it as a more cost-effective option. This further reduced pellet inquiries.

Amid the slowdown, pellet suppliers also pointed to receiving only selective inquiries. “We are getting inquiries, but only for pocket-sized orders. Market sentiment is still weak, but we expect some improvement in the next couple of days,” said a Raipur-based supplier. According to sources, only a few small-volume deals were concluded this week, reflecting buyers’ cautious stance.

The broader sentiment in the Raipur market remains weak, with most participants adopting a wait-and-watch approach as they track price movements in both raw materials and finished steel.  A sponge iron producer informed, “Everybody is observing the trend. No one wants to take a position too early. The semi-finished market is already on a falling trend.”

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
• Three (3) deals were recorded in this publishing window, with two (2) taken for calculation. Thus, the T1 trade category was accorded 50% weightage.
• Thirteen (13) firm offers, bids, and indicative prices were heard. Eleven (11) were taken for price calculation and given a balance of 50% weightage.

Key market drivers

• Sponge iron prices fall w-o-w: Sponge iron prices dropped sharply by INR 800/t ($9/t) w-o-w on 9 December to INR 23,100/t ($257/t) exw-Raipur. However, prices dropped by INR 300/t ($3.5/t) d-o-d. Market sentiment remained weak due to subdued finished steel demand, which continued to restrict sponge iron buying. Buyers largely preferred a wait-and-watch approach, delaying sizeable bookings in expectation of further price drops. Overall purchase activity remained need based, with no major bulk deals recorded.
• Billet prices decline w-o-w: BigMint’s billet index decreased by INR 250/t ($3/t) w-o-w to INR 36,450/t ($406/t) exw-Raipur on 9 December. Prices fell by INR 200/t ($2/t) d-o-d. The semi-finished steel market extended its downtrend, with sellers reducing offers in an effort to stimulate bookings. However, this led to only modest buying activity, as buyers remained cautious amid continuous market adjustments. Sentiment in the finished steel segment remained weak.

Outlook

Pellet prices in Raipur are expected to remain weak, though they could firm up if demand improves and steel prices show signs of stability. Steelmakers are hoping for a slight recovery in the finished steel market, which could help revive pellet booking activities in the coming days.