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BigMint: India's domestic pellet trade volumes fall nearly 40% m-o-m in Jun'24

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Pellets

BigMint Bureau

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19 Jul 2024, 13:28 IST

BigMint: India's domestic pellet trade volumes fall nearly 40% m-o-m in Jun'24

Pellet trade volumes in the domestic market dipped by 39% m-o-m to 536,000 tonnes (t) in June 2024 compared to 873,700 t in May 2024, according to data maintained with BigMint. This decrease can be largely attributed to bearish market sentiments in the sponge and finished steel sectors, which have adversely impacted pellet prices. Meanwhile, buyers have booked enough material in pre-monsoon restocking which led to a decrease in the trade volume this month.

Factors driving down domestic pellet trade volumes:

Decrease in sponge prices: Sponge PDRI prices in Raipur fell by INR 2,540/t m-o-m to INR 26,710/t while in the majority of regions, prices dipped by INR 1,000-2,600/t m-o-m in June. Lower demand for finished steel has impacted sponge iron prices. Buyers booked material on need basis and that too at the lower end of offers which has led to a drop in sponge PDRI prices in key regions.

Drop in OMC lumps offer: Odisha Mining Corporation (OMC) had conducted an auction for 2.91 million tonnes (mnt) of iron ore on 20 June, 2024 in which 2.8 mnt of iron ore got booked by the buyers out of which 1.114 mnt were lumps and 1.68 mnt comprised fines. Steelmakers showed an active response for the lumps auction but bids dropped around INR 1,100/t (weighted average) compared to last month. Notably, the miner had reduced the base prices m-o-m in the range of INR 250-300/t for June.

Pre-monsoon restocking-In May, buyers focused on restocking before the monsoon to ensure an uninterrupted raw material supply. Iron ore availability typically becomes challenging during the monsoon due to potential disruptions in mining operations.

M-o-M pellet trade comparison:

Pellex overview: The monthly average of BigMint's domestic pellet index, PELLEX, was assessed at INR 10,300/t, down by INR 200/t m-o-m as compared to May. Pellet prices in Raipur remained under pressure amid weak market sentiments and frequent pellet booking from the Odisha regions. The significant drop in sponge, pellet and finished steel prices kept the pellet market under stress, which resulted in minimal trading activity in the last couple of days.

Outlook

Pellet trade volumes are expected to remain under pressure in the coming month due to ongoing challenges like monsoon, amid a sluggish steel market.