- Buyers cautious amid liquidity worries
- Billet prices fall by INR 800-1,200 in last few days
Pellet prices in Raipur have remained largely stable over the past couple of days, with the market witnessing minimal to no buying activity from the local units. Sentiment continues to be weighed down by the sharp decline in sponge iron and semi-finished steel prices, which has forced buyers to adopt a wait-and-watch approach.
Price movements, trades
PELLEX, BigMint’s bi-weekly domestic pellet (Fe63%) index for Raipur, remained stable at INR 9,450/t ($105/t) DAP on 12 December compared to the previous assessment on 9 December. Limited demand was recorded during the assessment period. Around 20,000 t of pellets (Fe 62.5%, low-phosphorous) was sold by a local supplier at INR 9,600/t exw Raipur.
Raipur-based producers kept their offers for 62.5/63% (+/-0.5%) material stable at INR 9,300-9,600/t ($103-106/t) exw recently. Meanwhile, some Odisha-based sellers offered at INR 9,500-10,000/t DAP in Raipur.
Market scenario
According to a market participant, sponge iron and billet prices fell by INR 800-1,200/t in recent days, putting additional pressure on pellet demand. A market participant commented, “At the current offer levels, we are unable to purchase raw material. Liquidity is tight, and the downstream steel market is not giving us confidence to buy aggressively.”
The downstream weakness, especially in sponge and billet markets, has led mills to pause restocking of raw material. Buyers are monitoring price movements closely, expecting further clarity before initiating purchases. A pellet producer informed, “Even though pellet prices corrected earlier this week, we are still not getting firm inquiries from the buyer.”
Meanwhile, Odisha-based pellet suppliers are also struggling to sell their material in the Raipur market. Competitive offers from local sellers, combined with subdued demand, have limited inter-regional trade. A trader said, “The market is too weak to absorb outside material right now. Mills are cautious, and liquidity issues are visible everywhere.”
Market participants expect pellet prices to remain under pressure in the near term. With buyers reluctant to commit and the broader steel value chain trending downward, the market may witness further price corrections unless sponge iron and billet prices stabilize.
Overall, sentiment in the Raipur pellet market remains bearish, driven by weak liquidity, limited buying interest, and competitive pricing from suppliers.
NMDC auctioned 22,900 t of iron ore from its Bacheli mines, Chhattisgarh on 11 December. The entire 12,900 t of DR lumps (DRCLO, 10-40 mm, Fe 67%) offered was booked at around 8% premium (base price INR 6,800/t). However, 10,000 t ROM (10-150 mm, Fe 65.5%) remained unsold against a base price of INR 5,500/t. Prices are on FOR, ex-stockpile/mines basis, including royalty.
Rationale
- PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
- One (1) deal was recorded in this publishing window, not taken for calculation. Thus, the T1 trade category was accorded 50% weightage.
- Eleven (11) firm offers, bids, and indicative prices were heard. Seven (7) were taken for price calculation and given a balance of 50% weightage.
Key market drivers
- Sponge iron prices fall w-o-w: Sponge iron prices sharply dropped by INR 1,250/t ($14/t) w-o-w on 12 December to INR 22,600/t ($249/t) exw-Raipur. However, prices dropped by INR 300/t ($3.5/t) d-o-d. The soft demand environment continued to limit sponge iron procurement, keeping overall trading interest muted. Sellers attempted to stimulate buying by reducing offers; however, bearish sentiment and expectations of further downside restricted buyers from committing to sizeable bookings.
- Billet prices decline w-o-w: BigMint’s billet index decreased by INR 850/t ($9/t) w-o-w to INR 36,150/t ($400/t) exw-Raipur on 12 December. Prices fell by INR 200/t ($2/t) d-o-d. Billet marking the lowest level of the month. Continuous weakness in demand and lower bid levels exerted continued downward pressure, resulting in further price corrections throughout the week. Sellers attempted to stimulate demand by trimming offers, yet response remained limited amid cautious procurement and tightening margins in the semi-finished steel market.
Outlook
Pellet prices in Raipur are expected to remain volatile amid the weak downstream steel prices and continuous fall in the semi-finished steel prices..
Leave a Reply