- Tight iron ore lump and fines availability keeps seller sentiment firm
- Higher sponge iron and billet prices support pellet offers
PELLEX, BigMint’s bi-weekly domestic pellet (Fe 63%) index for Raipur increased by around INR 150/t w-o-w to INR 10,600/t DAP Raipur on 21 August 2026, supported by a broad-based rise in semi-finished and finished steel prices across central and eastern India.
Pellet offers also moved higher, with sellers quoting above INR 10,300/t ($107/t) ex-works. Improved demand from sponge iron and billet producers, coupled with limited availability of alternative iron ore feedstock, allowed pellet producers to hold firm on higher offers.
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, of which one (1) was taken for calculation. Thus, the T1 trade category was accorded a weightage of 0%.
- Fifteen (15) firm offers, bids, and indicative prices were heard, of which eleven (11) were taken for price calculation and given the balance 100% weightage.
Price movements and offers
Some major manufacturers in Raipur, Chhattisgarh, hiked offers for Fe 62.5/63% (+/-0.5%) grade pellets up to INR 10,500/t ($107/t) exw this evening (on 21 August).
Total deals accumulating to 30,000 t for Fe 62.5/63% grade pellets were reported to BigMint from Raipur-based sellers during the assessment period. The increase came amid tightening availability of iron ore lumps and fines in the region. The shortage pushed up sponge iron and billet prices, prompting producers to step up pellet procurement to maintain production levels.
Market scenario
Market sentiment was further strengthened by firm iron ore offers from Odisha following OMC’s recent auction. Lump ore average m-o-m bids increased by around INR 150-200/t, with higher-grade lumps attracting a premium of up to INR 200-300/t. Firm bookings at earlier levels, along with active demand in the sponge iron and pig iron segments, where prices increased by around INR 200-500/t across several regions, provided additional support to pellet prices.
A Raipur-based seller said, “Raw material costs have increased, while sponge iron and pig iron prices have also strengthened. With firm iron ore offers from Odisha and tighter availability of lumps during the monsoon, pellet producers have had to revise offers higher.”
Higher raw material costs, particularly for iron ore, combined with firm downstream steel prices, have encouraged pellet producers to raise offers.
Late in the day, some sellers revised pellet offers to around INR 10,500/t ex-Raipur, equivalent to approximately INR 10,650/t DAP Raipur. However, market participants noted that buying activity remains selective, with the recent improvement in demand largely driven by traders rather than end-user consumers.
A Raipur-based buyer said, “Pellet prices have increased sharply, but end-user demand is yet to improve proportionately. At current levels, bookings remain selective, and buyers are assessing whether the latest increase can be absorbed.”
Meanwhile, sellers expect monsoon-related disruptions to iron ore lump production in Odisha and surrounding regions to keep raw material costs elevated over the near term. Tight availability and firm sponge iron and pig iron prices are also providing support to pellet offers.
A trader noted that improved demand for sponge iron and pig iron has provided indirect support to pellets. However, the absence of strong end-user buying remains a concern, particularly as higher pellet offers could limit fresh procurement.
Participants also highlighted that the sustainability of the recent price increase will depend on downstream steel demand and actual market absorption. While traders have been relatively active, end-user consumers continue to buy cautiously and largely against immediate requirements.
A Raipur-based buyer said, “The market has strengthened, but pellet prices are already at elevated levels. Unless sponge iron and billet prices continue to rise or raw material availability becomes tighter, buyers may resist further increases.”
Market participants expect pellet prices to remain firm over the next one to two weeks, supported by higher iron ore costs and monsoon-related supply constraints. However, the extent of further gains will largely depend on end-user demand, downstream steel prices and whether the recent increase in pellet offers is fully absorbed.
Key market drivers
- Sponge iron prices rise w-o-w: Sponge PDRI prices gained by INR 1,700/t w-o-w to INR 27,750/t ($290/t) exw Raipur on 21 August. Prices rose by INR 750/t on a d-o-d basis. The market witnessed stronger late-evening activity on the previous day, encouraging buyers to actively book material amid expectations of further price increases. The upward movement was mainly driven by rising coal costs, which increased input expenses and put pressure on sellers margins. As a result, sellers attempted to push offers higher. Firm finished steel prices also provided additional support to the sponge iron market.
- Billet prices increase w-o-w: BigMint’s billet index in Raipur rose by INR 1,750/t w-o-w to INR 40,550/t ($424/t) exw on 21 August 2026. Billet index increased by INR 1,050/t d-o-d, extending its recent upward trend. The rally was primarily due stronger price cues from neighbouring markets, alongside rising raw material costs and higher production expenses. Several participants had already secured sufficient material during earlier sessions at lower prices, further limiting fresh procurement.
Outlook
The sustainability of the recent strength in sponge iron and downstream steel prices remains questionable amid selective buying and limited end-user demand. However, pellet sellers are likely to revise offers higher on an incremental basis, supported by elevated iron ore costs and tight raw material availability. Further price gains are expected to remain measured, with actual demand absorption likely to determine the extent of the upside.
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