India: PELLEX remains stable amid need-based buying

• Sponge PDRI, billet tags fall by INR 450-500/t w-o-w
• Buyers in Raipur remain cautious 

Pellet prices in Raipur remained unchanged this week after witnessing a sharp correction of INR 300-400/t ($4-5/t) in the previous week. Market participants indicate that sellers are holding their current offer levels and awaiting counters from buyers.

Price movement:

PELLEX, BigMint’s bi-weekly domestic pellet (Fe63%) index for Raipur, remained stable at INR 9,400/t ($110/t) DAP Raipur on 27 May compared to the previous assessment on 23 May.

Raipur-based pellet makers kept their offers stable for Fe62/63% (+/_0.5%) material at INR 9,200-9,300/t ($107-109/t) exw today. Some plants kept their sales closed amid volatile market sentiments. Pellet (Fe 62.5-63%) offers from Odisha for Raipur-based buyers were heard at INR 9,000-9,300/t ($106-109/t) DAP, and transactions were limited in the last couple of days.

Trade activity:

Around 25,000 t of pellets (Fe62%) deals were concluded by a Raipur seller at INR 9,100 ($107/t) exw. Meanwhile, 20,000 t of pellets (Fe63%) were booked by Raipur buyers at INR 9,100-9,300/t ($107-109/t) DAP from Odisha.

Market sentiments:

A market participant commented: “Most buyers are still cautious. They are purchasing only to meet immediate needs and are not actively negotiating due to the prevailing weak sentiment in the semi-finished steel market.”

A few deals have been concluded at revised price levels in the last couple of days, but overall trade activity remains sluggish. Buyers are also sourcing limited quantities from Odisha, taking advantage of regionally competitive offers.

A buyer informed, “Since sponge iron and billet prices have declined further, buyers expect another round of correction in pellet prices. They are hesitant to build inventories at current levels.”

Inquiries for material remain limited, with most buyers adopting a wait-and-watch approach. This has kept the market sentiment weak, despite the stability in pellet prices this week. However, restocking for monsoon is still awaiting though buyers are watchful for prices.

A seller said, “Volatility in the semi-finished market is keeping everyone on edge. We might see some price adjustments soon if the downtrend continues. Currently, we are keeping offers unchanged.”

Rationale

• PELLEX has been derived using data points, ie, trades, offers, and bids. To download the detailed methodology, click here.
• Two (2) deals were reported so far in this publishing window, and one (1) was taken for calculations. The T1 trade category was accorded 50% weightage.
• Fifteen (15) 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 tags drop d-o-d: P-DRI price fell by INR 450/t (6/t) w-o-w to INR 23,900/t ($280/t) exw-Raipur on 27 May. Meanwhile, prices dropped by INR 50/t ($0.5/t) d-o-d. Weak demand has increased sponge inventory, leading to price cuts. However, transaction volumes were average today.
• Billet prices fall d-o-d: Billet prices in Raipur dropped by INR 500/t ($6/t) d-o-d to INR 39,500/t ($463/t) exw today. Prices saw a downtrend of INR 200/t ($2.5/t)d-o-d.

Outlook

As per BigMint’s analysis, in the near term, pellet prices are expected to remain volatile and largely influenced by trends in the semi-finished steel segment. Market participants will closely track buying cues and input cost dynamics before taking further price decisions.