India: Domestic pellet trade volume plunges 60% m-o-m in Oct'24 amid festive lull

• Volatility in demand weighs on trade volume
  
  
• Pellet prices in Bellary rise INR 1,000/t m-o-m
  
  

Pellet trade volumes in the Indian domestic market plummeted by 60% m-o-m to 655,000 tonnes (t) in October 2024 from 1.63 million tonnes (mnt) in September 2024, according to data maintained by BigMint. The drop was primarily driven by fluctuating demand in the sponge iron and downstream steel segments, on account of subdued market activity during the festive season.

Factors affecting domestic pellet trade volumes

• Higher pellet prices: Pellet prices saw a notable increase of INR 1,000-1,600/t across most regions in October, driven by higher Odisha Mining Corporation (OMC) bids and increased sponge iron and finished steel prices. In Durgapur (eastern India), average prices climbed up by INR 1,600/t to INR 9,500/t in October, compared to INR 7,900/t in September. Meanwhile, in Bellary, Karnataka, tags stood at INR 10,400/t in October compared to INR 9,400/t in September, a rise of INR 1,000/t. However, the market remained subdued due to bid-offer mismatches and buyers holding off on new purchases.
  
  
• Sufficient inventory levels: Buyers stayed inactive in October due to sufficient inventory purchased in the previous month, amid market uncertainties stemming from price fluctuations. This cautious approach led to reduced market activity and, in turn, the significant drop in pellet trade volumes.
  
  
• Higher production costs: Rising production costs contributed to the increase in pellet prices, which ultimately reduced buying interest. As a result, many buyers shifted their focus away from the pellet market. Consequently, overall market activity saw a noticeable decline.
  
  
• Seasonal disruptions, market instability: Pellet trade volumes were also affected due to the festive holidays during the month. Market participants stayed on the sidelines, taking time off for the festive season. Additionally, volatility in finished steel demand, which spiked and then fell sharply, further dampened market activity. This uncertainty caused hesitation among buyers, contributing to the slowdown in pellet trade.
  
  

M-o-m pellet trade comparison

PELLEX records m-o-m uptrend

The monthly average domestic pellet index, PELLEX, surged by INR 1,350/t m-o-m in October to INR 10,100/t DAP Raipur. National Mineral Development Corporation (NMDC) raised raw material prices twice in October, and higher offers from eastern region miners led to an increase in pellet tags.

Outlook

Pellet trade volume is expected to remain range-bound. Pellet makers have reduced offers sharply in November, considering the drop in trade volumes. In the coming days, movements in the finished and semi-finished segments will determine the direction of pellet prices.