- Firm fines bids at OMC auction boost pellet market sentiment
- Sponge iron prices rise INR 500/t, billet up INR 1,100/t w-o-w
Pellet prices in the Raipur region remained firm over the last three to four days, on 23 December, marking a notable rebound after a prolonged, muted market was observed during the previous two weeks. The revival in trading activity was supported by an improvement in sponge iron and steel prices, which boosted buyer confidence and encouraged active spot transactions.
Price movements, trades
PELLEX, BigMint’s bi-weekly domestic pellet (Fe63%) index for Raipur, remained stable at INR 9,400/t ($105/t) DAP on Tuesday compared to the previous assessment on 19 December. Deals for around 75,000 t of pellets were concluded by Raipur-based sellers at INR 9,200-9,400/t ($103-105/t) exw.
Raipur-based producers kept their offers for 62.5/63% (+/-0.5%) material stable at INR 9,300-9,400/t ($104-105/t) exw recently. Meanwhile, some Odisha-based sellers offered material at INR 9,650-10,100/t ($108-113/t) DAP in Raipur.
Market scenario
Market participants indicated that the recent uptrend in sponge iron and semi-finished steel prices has played a key role in stabilising pellet prices. A player informed BigMint, “The rise in sponge iron prices has improved margins for manufacturers, which has directly supported pellet demand. A sharp INR 1,000/t increase in billet prices has also strengthened sentiment across the steel value chain.”
Another source highlighted that the response received in recent OMC iron ore auctions also contributed to market stability: “Bids at the fines auction were firm, which kept pellet prices stable, and with sponge iron prices also gaining, buyers became more active in the pellet market.”
Sellers in the region confirmed that a significant volume of material was traded during the past 3-4 days. A pellet producer said, “We have liquidated most of our available inventory at the current offers amid improved demand.”
Following the recent spate of orders, some suppliers have temporarily closed spot sales and are planning to reassess the market before releasing fresh offers.
Meanwhile, another producer said that improving liquidity in the downstream steel segment facilitated the conclusion of bulk deals. He added, “With better liquidity in the steel market, we sold some bulk quantities at prevailing prices and are now considering revising offers 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 recorded in this publishing window, and four (4) were taken for calculation. Thus, the T1 trade category was accorded 50% weightage.
- Eleven (11) 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 prices rise w-o-w: Sponge iron prices rose by INR 500/t ($5.5/t) w-o-w on 23 December to INR 23,200/t ($259/t) exw-Raipur. Furthermore, prices fell by INR 200/t ($2/t) d-o-d. Growing confidence among buyers, coupled with a strong pick-up in finished steel demand, lifted overall market sentiment and encouraged participants to accept higher prices this week.
- Billet prices surge w-o-w: BigMint’s billet index increased by INR 1,100/t ($12/t) w-o-w to INR 37,700/t ($421/t) exw-Raipur on 23 December. Prices dropped by INR 200/t (2/t) d-o-d. Prices fell due to subdued enquiries, and cautious market sentiment weighed on overall activity. Trading activity remained limited, with participants avoiding bulk bookings and closely tracking finished steel price movements before committing to fresh procurement.
Outlook
According to BigMint’s analysis, pellet prices in the Raipur region are expected to remain supported in the short term, backed by resumed trading activity, firm downstream prices, and limited spot availability. A marginal increase in pellet offers is likely in the coming days if current market momentum sustains.
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