India: PELLEX stays largely stable with pockets of trades continue in Raipur

• Sponge PDRI, billet prices drop INR 200-300/t w-o-w
• Pellet trades continue in Raipur at discounted prices

PELLEX, BigMint’s bi-weekly domestic pellet (Fe 63%) index for Raipur, inched down by INR 50/t to INR 9,550/t ($100/t) DAP on 26 May (Tuesday) against 22 May. BigMint recorded a few deals totalling around 60,000 t, concluded at INR 9,300-9,500/t ($98-99/t) exw-Raipur by local producers.

Pellet prices in the Raipur region remained largely stable this week, although some pockets of trade activity were witnessed following a slight improvement in sponge iron and billet prices over the last couple of days. Market participants said that while sentiment has marginally improved compared to the previous week, overall buying interest continues to remain cautious after the sharp correction in pellet prices witnessed over the past few weeks.

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
• Three (3) deal were recorded in this publishing window and all were taken for calculation. Thus, the T1 trade category was accorded 50% weightage.
• Seventeen (17) firm offers, bids, and indicative prices were heard, and fourteen (13) were taken for price calculation and given the balance 50% weightage.

Trades and price movements

Pellet manufacturers in Raipur kept stable offers for Fe 62.5/63% (+/-0.5%) grade pellets at INR 9,400-9,500/t ($98-99/t) exw. Meanwhile, few deals heard at the discounted prices amid the weaken liquidity in Raipur market.

Local pellet suppliers maintained their current offers amid expectations that downstream steel markets may gradually stabilize. However, sellers indicated that inquiries from buyers are still slow and most purchases are taking place only on a need-based basis.

Market scenario

One local buyer stated, “A few deals have happened below current offer levels in Raipur, but buying activity is not aggressive. Steelmakers are still evaluating market direction before making bulk purchases.”

A Raipur-based pellet seller said, “We are maintaining the same offers as there is some improvement in sponge iron and billet prices in last couple of days, but buyers are still reluctant to book aggressively. Demand is only requirement-based at the moment.”

According to buyers, some deals have been concluded at discounted levels compared to prevailing market offers, particularly in order to liquidate inventories and secure immediate cash flow. However, steelmakers are still taking a cautious approach due to uncertainty in finished steel demand and margin pressures.

Market participants highlighted that competitive offers from Odisha-based suppliers continue to exert pressure on local pellet producers. Due to this, some Raipur suppliers were compelled to conclude deals at revised offers to retain customer interest and maintain movement in the market.

Another steelmaker commented, “Odisha suppliers are offering competitive prices, which is forcing local suppliers to stay flexible. Because of this, some trade activity is continuing in pockets despite weak overall sentiments.”

Pellet prices have already witnessed a sharp decline in the last couple of weeks, which has somewhat improved buying interest at lower levels. If sponge iron and semi-finished steel prices continue to show positive movement over the coming days, additional trades may be concluded by local buyers.

Key market drivers

• Sponge iron prices drop w-o-w: Sponge PDRI prices decreased by INR 200/t ($2/t) w-o-w to INR 25,000/t ($261/t) exw Raipur on 26 May. Prices increased by INR 200/t in Raipur amid limited enquiries and higher offers from sellers, amid sufficient bookings already booked from buyer.
• Billet prices weaken w-o-w: BigMint’s billet index in Raipur decreased by INR 150/t ($1.5/t) w-o-w to INR 39,350/t ($411/t) exw on 26 May. Meanwhile, the index rose by INR 300/t ($300/t) d-o-d. The further uptick in billet prices was primarily supported by improved trading activity in previous sessions and positive cues from northern India. However, fresh enquiries slowed as buyers turned cautious, preferring to await more clarity on downstream finished steel demand before entering new deals.

Outlook

As per BigMint analysis, for the near term, pellet prices in the Raipur market are expected to remain largely stable during the current week, supported by steady offers but capped by cautious buying sentiment.