- Raipur’s pellet offers increase INR 200/t, w.e.f yesterday
- Sponge PDRI gains INR 750/t, billet up INR 150/t w-o-w
Pellet prices in the Raipur region strengthened during this publishing window, buoyed by the second consecutive hike of INR 200/tonne (t) by local producers. The upward price revision follows increased demand and firm sentiment in the semi-finished steel segment, particularly sponge PDRI. Raipur-based buyers favoured local material over Odisha pellets due to competitive prices and easy availability.
Price movements, trades
PELLEX, BigMint’s bi-weekly domestic pellet (Fe63%) index for Raipur, rose by INR 200/t ($2.5/t) to INR 9,300/t ($108/t) DAP on 11 July compared to the previous assessment on 8 July.
Raipur-based pellet producers raised their Fe 62/63% (+/-0.5%) offers by INR 200/t ($2.5/t) to INR 9,200/t ($107/t) exw, with 50,000-60,000 t traded at previous prices in the last few days. Maintenance shutdowns at 10-11 sponge iron units caused a daily production loss of about 3,000 t, supporting sponge PDRI and pellet prices in Raipur. Additionally, logistical challenges and the unviability of Odisha pellets strengthened Raipur’s offers.
Pellet (Fe 62.5-63%) offers from Odisha for Raipur buyers were heard at INR 9,000-9,400/t ($105-110/t) DAP.
Market scenario
Sources reported that active trades were concluded at the older offers, as buyers sought to secure material ahead of the price revision. A local buyer noted, “We booked good volumes at the earlier offers, considering the rising trend in sponge and billet prices. Following the initial round of bookings, producers rolled out higher offers, supported by sustained inquiries.”
The ongoing monsoon further tilted preference towards pellets over iron ore lumps due to better handling and productivity in the rainy season. “Heavy rainfall has disrupted lumps movement and usage. Pellets are more viable right now, hence in better demand,” commented a sponge iron manufacturer.
Additionally, Odisha-origin material was deemed unviable for Raipur-based buyers due to logistical challenges and higher prices, making local supply more attractive. Another buyer noted, “We are focusing on local purchases, as Odisha supply is not feasible in this weather.”
Some suppliers have already closed fresh sales to focus on dispatches of previously booked material. With sponge iron and other semi-finished products witnessing a sharp upward price movement, pellet producers gained confidence to increase their offers.
However, some buyers remained cautious and waited for further price clarity. A sponge iron producer added, “The price hike seems artificial. If sponge prices do not sustain, pellet prices will correct again.”
Market participants expect prices to remain stable this week, with limited deals likely across a few pockets.
Rationale
- PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
- Three (3) deals were reported in this publishing window, and not one (1) taken for calculations. The T1 trade category was accorded 50% weightage.
- Twelve (12) firm offers, bids, and indicative prices were heard. Nine (9) were taken for price calculation and given a balance of 50% weightage.
Key market drivers
- Sponge iron tags rise w-o-w: P-DRI prices increased by INR 750/t ($8-9/t) w-o-w to INR 23,500/t ($274/t) exw-Raipur on 11 July. Meanwhile, prices saw a slight drop of INR 200/t ($2.5/t) d-o-d today. Despite subdued end-product sales, expectations of a demand recovery in the near term kept buyer interest afloat, particularly in regions with tight availability.
- Billet prices increase w-o-w: Billet prices in Raipur rose by INR 150/t ($1.5/t) w-o-w to INR 36,850/t ($430/t) exw today. Prices dropped by INR 250/t ($3/t) d-o-d. Market activity remained limited throughout the day, with varying offers failing to prompt active procurement. Buyers appeared hesitant, closely monitoring market direction amid concerns related to the sustainability of current prices, especially as raw material costs surged while finished steel demand remained subdued.
Outlook
According to BigMint, prices are expected to remain stable this week, with need-based pockets of trade likely at the current offers.
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