India: PELLEX remains firm on active demand from sponge iron manufacturers

• Around 150,000 t of deals recorded in Raipur this week
• Some DRI mills opt for maintenance shutdown 

Pellet prices in the Raipur region remained stable in the last couple of days, supported by active trading and improved buying sentiment. Market participants reported that demand has increased at current price levels, with buyers actively restocking amid the ongoing monsoon season.

Price movements and trades

PELLEX, BigMint’s bi-weekly domestic pellet (Fe63%) index for Raipur, remained stable at INR 8,900/t ($104/t) DAP Raipur on 4 July compared to the previous assessment on 1 July.

Raipur-based pellet producers kept stable offers for Fe 62/63% (+/_0.5%) material at INR 300/t ($3.5/t) to INR 8,700-8,800/t ($102-103/t) exw.

Around 80,000 t of deals were recorded in Raipur concluded by the local sellers in the last couple of days. The deals were heard concluded at INR 8,700-8,800/t exw.

Pellet (Fe 62.5-63%) offers from Odisha for Raipur buyers were heard at INR 8,600-9,200/t ($100-107/t) DAP.  Meanwhile, 10,000 t of pellets was booked recently from Odisha.

Notably, Raipur market witnessed around 155,000 t of pellet deals this week, showing the active demand at the price corrections.

Market scenario

Over the past couple of days, several deals have been concluded as sponge iron manufacturers resumed need-based procurement to maintain plant operations. A Raipur-based buyer mentioned, “The current price levels are workable, and with monsoon logistics challenges ahead, we are gradually restocking to avoid any availability concern in the coming days.”

Interestingly, buying activity was also noted from outside Raipur, indicating a broader sentiment shift. A buyer commented, “Apart from local buyers, we have seen active interest from nearby regions. Stable pricing has offered some confidence to book pellet as a market participant, expecting the rise in sponge and semi-finished steel prices.”

However, some buyers remain cautious and are still holding out for possible price corrections. A pellet producer informed, “Meanwhile, buying sentiment has improved; a few buyers are waiting, expecting a small price drop in the near term.”

Additionally, market sources expressed that Odisha-origin material is currently not viable for Raipur-based buyers due to high freight costs and quality mismatch, such as higher moisture percentage due to the rainy season. This has further supported the demand for locally available pellets.

Meanwhile, sponge iron and billet prices have remained rangebound this week, providing a relatively steady outlook for raw material demand. Overall, the pellet market in Raipur appears balanced, with steady demand and stable prices expected to continue in the near term.

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 in this publishing window and all were taken for calculations. The T1 trade category was accorded 50% weightage.
• Twelve (12) firm offers, bids, and indicative prices were heard. Ten (10) were taken for price calculation and given a balance of 50% weightage.

Key market drivers

• Sponge iron tags up w-o-w: P-DRI prices increased by INR 400/t ($4.5/t) w-o-w at INR 22,750/t ($266/t) exw-Raipur on 3 July. Meanwhile, prices saw a rise of INR 200/t ($2.5/t) d-o-d. In the Raipur market, approximately 10 – 11 sponge iron mills have undertaken maintenance shutdowns, leading to an estimated production loss of around 3,000 t/per day. This temporary supply disruption is expected to lend some support to prices in the near term.
• Billet prices down w-o-w: Billet prices in Raipur decreased by INR 350/t ($4/t) w-o-w to INR 36,750/t ($430/t) exw today. Prices saw stability d-o-d. Modest buying was recorded at varied price levels in the semi-finished steel segment, primarily driven by need-based procurement.

Outlook

According to BigMint, the pellet market is expected to stay active in terms of transactions, as there is still strong buying interest. However, prices are likely to fluctuate in the coming days, influenced by sponge prices and the mood of trade in the export market.

However, the ongoing maintenance shutdown of some sponge mills may reduce pellet demand, but it will have a lesser impact.