India: PELLEX remains stable with need based trades in Raipur

• Sponge iron and billet price falls upto INR 1,200/t w-o-w
• OMC hike base prices by INR 300-350/t m-o-m

Pellet prices in the Raipur region remained largely stable in the week ended 17 February, with a few transactions concluded at prevailing levels. Market participants noted that trading activity was moderate, as most buyers have already secured sufficient raw material inventories and are currently adopting a cautious approach toward fresh procurement.

Trades and price movements

PELLEX, BigMint’s bi-weekly domestic pellet (Fe 63%) index for Raipur, remained stable at INR 10,550/t ($117/t) DAP on 17 February compared to the previous assessment on 13 February. Around 15,000 t of pellet (Fe 63%) deals were concluded in the market at INR 10,500/t ($116/t) exw Raipur.

Raipur-based pellet producers kept offers stable for Fe 62.5-63% (+/-0.5) grade pellets at INR 10,400-10,500/t ($115-116/t) exw. However, few pellet maker from Raipur kept the offer closed. Odisha pellet offers are still not viable for the Raipur buyers amid competitive local prices.

Recent decreases in sponge iron and billet prices have made buyers cautious, further impacting the trading volume of pellets in Raipur.

Market dynamics

According to steelmakers, preference has slightly shifted toward iron ore lumps due to their relative cost-effectiveness compared to pellets. A buyer said, “We have adequate pellet stocks for now, and with lumps offering better cost dynamics, procurement has been need-based rather than aggressive.”

Market sentiment is currently focused on the upcoming iron ore auction by Odisha Mining Corporation (OMC) scheduled for 19 February. Participants expect the auction results to provide fresh direction to the market and greater clarity on raw material pricing trends. OMC recently increased its base prices by around INR 300-350/t compared to the previous month, which has added to the cautious sentiment.

Another market participant said, “Much will depend on how the OMC auction unfolds. If prices remain firm or move higher, pellet prices may see an upward revision. Otherwise, stability could continue.”

On the supply side, sellers have maintained their offers at unchanged levels this week, awaiting stronger buying interest. However, trading momentum slowed slightly over the past couple of days following a decline in sponge iron and billet prices, which has impacted downstream demand sentiment.

As a result, only need-based trades were observed during the week. Market participants expect pellet prices to remain rangebound in the coming days, with any significant movement likely to emerge only after the outcome of the OMC auction becomes clear.

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
• One (1) deals were recorded in this publishing window, so this category was taken for calculation. Thus, the T1 trade category was accorded 50% weightage.
• Fourteen (14) firm offers, bids, and indicative prices were heard. Eleven (11) were taken for price calculation and given balance 50% weightage.

Key market drivers

• Sponge iron prices fall w-o-w: Sponge iron prices declined by INR 600/t ($6/t) w-o-w on 17 February to INR 27,300/t ($301/t) exw-Raipur. Prices in Raipur inched down by INR 200/t d-o-d. Buying activity improved to a moderate level during the day, as the price decline encouraged greater buyer participation. Enquiry levels strengthened compared to previous sessions, reflecting improved market interest. As a result, overall trade activity witnessed an improvement.
• Billet prices up w-o-w: BigMint’s billet index decreased by INR 1,200/t ($13/t) w-o-w to INR 41,000/t ($452/t) exw-Raipur. Meanwhile, prices also fell by INR 300/t d-o-d today. Trading activity was largely confined to need-based purchases, with moderate buying observed at reduced price levels. However, the broader tone stayed bearish, as subdued downstream demand continued to weigh on procurement decisions. Buyers maintained a cautious stance, placing lower bids, which compelled sellers to trim spot offers further to stimulate enquiries.

Outlook

The pellet prices in the Raipur region are expected to remain stable, with a correction anticipated after the OMC auction.