- Sponge iron, billet prices drop INR 600-750/t w-o-w
- No deals in Raipur heard from suppliers in Odisha
Pellet prices in the Raipur cluster remained rangebound following the recent OMC auction, with trading activity subdued due to weak market fundamentals. Suppliers largely held their offers but buyers continued to stay away from active procurement due to a widening gap between bids and offers, which led to sluggish sales.
The recent decline in pellet-based sponge iron and billet prices within the range INR 600-750/t ($7-9/t) kept pellet deals on hold.
Price movements
PELLEX, BigMint’s bi-weekly domestic pellet (Fe63%) index for Raipur, inched down by INR 50/t ($0.5/t) INR 9,150/t ($106/t) DAP Raipur on 24 June compared to the previous assessment on 20 June. Raipur-based pellet producers kept their offers stable for Fe 62/63% (+/_0.5%) material at INR 9,000-9,100/t ($106-107/t) exw.
No major trade activity was witnessed in Raipur in this publishing window. Only 10,000 t of pellets were sold by the Raipur-based pellet producer. Some trades were heard conducted to meet immediate requirements, although confirmation is till awaited.
Pellet (Fe 62.5-63%) offers from Odisha for Raipur-based buyers were heard at INR 8,600-9,000/t ($100-105/t) DAP. No trades were recorded in this publishing window from Odisha.
Market updates
Market participants indicated that the consistent decline in sponge iron and semi-finished steel prices has made current pellet offers unviable for buyers. A sponge iron producer said, “There has been a sharp fall in sponge iron prices in recent weeks, but pellet prices have not corrected. At these levels, it doesn’t viable for us to buy.”
On the flip side, pellet producers are struggling to reduce offers due to elevated raw material costs. A pellet supplier informed, “Iron ore prices remain firm, and operational costs are high, which is limiting our flexibility to cut pellet prices despite slower inquiries.”
Meanwhile, in other markets such as Durgapur, pellet prices increased this week even after the drop in OMC auction bids. Higher production cost was a reason for this hike.
The market is experiencing a cautious phase as sentiments across the value chain have weakened. Buyers are choosing to wait for clearer price direction, anticipating potential corrections in pellet prices in the near term. A buyer informed, “Unless pellet prices realign with the current sponge iron market, we may continue to see muted trade activity.”
Rationale
- PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
- No deals were reported in this publishing window and were not taken for calculations. The T1 trade category was accorded 0% weightage.
- Twenty-four (24) firm offers, bids, and indicative prices were heard. Twenty (20) were taken for price calculation and given a balance of 100% weightage.
Key market drivers
- Sponge iron tags fall d-o-d: P-DRI prices fell by INR 600/t ($7/t) w-o-w to INR 22,250/t ($258/t) exw-Raipur on 24 June. Meanwhile, prices moved down by INR 50/t ($0.5/t) d-o-d. Some need basis trades were concluded in Raipur during today’s trading session, with buyers’ bids being lower for the trades.
- Billet prices down w-o-w: Billet prices in Raipur decreased by INR 750/t ($9/t) w-o-w to INR 37,050/t ($431/t) exw today. Prices saw a fall of INR 50/t ($0.5/t) d-o-d. Despite price reductions, market activity and buying interest failed to pick up, as weak sentiments and lower bids continued to weigh on spot trading throughout the day. Sellers were compelled to lower spot offers in the semi-finished segment to attract interest, but response remained muted.
Outlook
According to BigMint, the domestic pellet market is expected to remain volatile in the coming days, with deals likely to remain under pressure due to limited inquiries and disparity in bid and offers. This is expected to prevail until cost dynamics change significantly.
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