- Pellet purchases unviable for mills amid dull demand
- Entire iron ore offered stays unsold in NMDC auction
Pellet prices in the Raipur region remained largely stable this week despite limited trading activity. Sellers continued to maintain their previous offer levels, even as buyers showed reluctance at current prices due to the ongoing decline in sponge iron and semi-finished steel prices. The persistent downward trend in downstream products has made pellet buying unviable for many steelmakers.
Price movements
PELLEX, BigMint’s bi-weekly domestic pellet (Fe63%) index for Raipur, remained stable at INR 9,200/tonne (t) ($107/t) DAP Raipur on 20 June compared to the previous assessment on 17 June. Raipur-based pellet makers kept their offers stable for Fe 62/63% (+/_0.5%) material at INR 9,000-9,100/t ($105-106/t) exw.
Deals of around 21,000 t of pellets (Fe62/63%) were recorded by a Raipur-based supplier in this publishing window, while other plants encountered bid-offer disparities.
Pellet (Fe 62.5-63%) offers from Odisha for Raipur-based buyers were heard at INR 8,700-9,000/t ($103-105/t) DAP. No trades were recorded in this publishing window from Odisha suppliers in the Raipur market.
NMDC had conducted an auction for 21,500 t of DRCLO (10-40 mm, Fe 67%), 129,000 t Baila fines (Fe 64%) and 4,000 t of Baila lumps (10-20 mm, Fe 65.5%) on 19 June from its Bacheli mines. According to sources, the entire auction quantity remained unsold amid the poor market and lack of confidence from buyers.
Market sentiments
The gap between bids and offers has widened significantly, leading to low trade volumes in the region. A buyer, dwelling on the current market dynamics, said: “We are not able to match the offered levels. The current sponge market doesn’t support pellet buying at these rates.”
Some market participants noted that bids dropped by around INR 250/t ($3/t) in the latest OMC iron ore fines auction held yesterday. This has raised expectations of a downward correction in pellet prices in the near term.
A trader observed: “As the bids soften at the OMC auction, we may see sellers reduce prices soon to encourage movement in this weaker market trend.”
Urgent requirement-based deals were the only trades reported in Raipur this week, while most buyers continued to stay away, adopting a wait-and-watch approach. Additionally, there were no pellet supply deals reported from Odisha-based suppliers to Raipur buyers, reflecting weak inter-state trading sentiment.
Market sources indicated that prices may decline in the coming days due to limited buyer interest and the absence of bulk orders.
Rationale
- PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
- Two (2) deal were reported in this publishing window and were taken for calculations. The T1 trade category was accorded 50% weightage.
- Eighteen (18) firm offers, bids, and indicative prices were heard. Fifteen (15) were taken for price calculation and given a balance of 50% weightage.
Key market drivers
- Sponge iron tags fall d-o-d: P-DRI prices fell by INR 450/t ($5/t) w-o-w to INR 22,400/t ($259/t) exw-Raipur on 20 June. Meanwhile, prices moved down by INR 150/t ($2/t) d-o-d. Today’s trading session remained quiet with only need basis deals witnessed in the market.
- Billet prices down w-o-w: Billet prices in Raipur decreased by INR 550/t ($6/t) w-o-w to INR 37,350/t ($431/t) exw today. Prices saw a fall of INR 150/t ($2/t) d-o-d. Trading activity was largely confined to need-based purchases, with moderate buying observed at reduced price levels. However, the overall market tone stayed bearish, with most participants remaining cautious due to subdued demand across segments.
Outlook
According to BigMint’s analysis, the pellet market is expected to drop in the near term amid muted sentiment and cautious purchasing behaviour from the Raipur steelmakers.
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