- Active deals supported the offers
- Demand increased from neighboring region
SteelMint’s bi-weekly domestic pellet (Fe 63%) index, remained stable at INR 9,600/t DAP Raipur on 23 January 2024 compared to the last assessment on 19 January 2024. Deals of 47,500 t were heard at INR 9,550-9,600/t DAP in this publishing window. As per sources, the material was bought by neighbouring sponge iron makers, while local buyers just booked as per immediate needs. Some Odisha-based plants offered material to Raipur buyers at a discount of INR 200-300/t compared to prevailing offers.
Buyers booked the material this week following the offers revised by Raipur pellet makers last week. Finally, buyers took the step to concluding deals while they remained cautious in the previous few days.
According to market participants, “Following the downtrend in sponge and finished steel amid the liquidity issue, the pellet makers were forced to drop offers in the last week which had encouraged the buyers and traders for deals.”
A buyer said: “The pellet prices in the region declined last week but there was no improvement in the steel commodities and buyers hesitate to book advance material. They just booked the material to operate plants and remained cautious.”
The conversion spread from sponge iron (PDRI) to billets for the standalone furnaces in the region was recorded at INR 13,200/t and received a slight drop this week. However, few market observers expect an improvement in the spread 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.
- Three (3) deals have been reported so far this week, and all were taken into account for price calculation and accorded 50% weightage for T1 trade.
- Nine (9) firm offers, bids, and indicative prices were heard. Seven (7) were taken for price calculation and given the balance 50% weightage.
Market highlights
- Raipur pellet offers stable: Godawari Power and Ispat Ltd (GPIL) pellet (Fe 63% +/-0.5) offers remained stable INR 9,800/t ($118/t) exw-Raipur. Meanwhile, other major pellet players’ offers also remained unchanged at recorded at INR 9,400-9,500/t ($113-114/t) exw today. Notably, last week the Raipur pellet makers reduced the price twice following the buyers mood.
- P-DRI prices in Raipur drop d-o-d: SteelMint’s P-DRI (FeM 80%) prices decreased by INR 100/t d-o-d to INR 26,350/t exw on 23 January. The assessment for the sponge in Raipur dropped by INR 150/t w-o-w today. Sponge iron prices in India experienced a slight decrease, ranging from INR 50 – 400/t d-o-d in the major regions. This decline is noted to have impacted firm market sentiments, especially after the holiday mode. Despite this, buying activity in the semi-finished segment remained on the lower side on 23 January 2024.
- Billet prices in Raipur drop d-o-d: Billet prices in Raipur fell d-o-d by INR 250/t to INR 39,500/t exw on 23 January. The prices sharply fell by INR 150/t w-o-w. The decline was driven by lower trade rates and reports of billet offers from Raipur to the western region. Nominal trade volumes were observed for semi-finished and finished materials, totaling 1,800t compared to 1,400t on 20 January.
Outlook
The pellet market is expected to remain sustainable at this level following the expectation of a rise in demand.