India: Pellet trade volumes rise 4% m-o-m in Feb'24 amid subdued export demand

Pellet trade volumes in the domestic market rose by 4% m-o-m to 645,000 tonnes (t) in February 2024 compared to 617,900 t in January 2024, according to data maintained with BigMint. Owing to fall in pellet prices following decline in export realisation led pellet makers to prefer to sale in the domestic market.

Factors driving up domestic pellet trade volumes:

• Fall in pellet offers: During February, pellet prices dropped across most of the region by INR 50-650/t due to fall in OMC bids, bid-offer disparity and weakened demand were seen in the market. In Barbil (Eastern India) average pellet prices were dropped by INR 500-600/t to INR 8,600/t against January.
  
  
• Subdued export demand: BigMint's India pellet (Fe 63%, 3% Al) export (FOB east coast) index sharply decreased by $11/t m-o-m to $113/t in February 2024. Bids-offers disparity weighed down the pellet deals from India in this month. Sluggish market sentiments and lack of inquiries in the seaborne market have affected the export demand. Chinese steelmakers avoided booking premium material amid poor steel margins in the domestic market. Pellet players preferred to sell in the domestic market last month as they were getting better realisations than in exports. In February on an average domestic ex-plant realisation was around INR 1,000-1,100/t better compared to export ex-plant.
  
  
• Drop in OMC offer: OMC had conducted an auction for 2.8 mnt of iron ore on 19 February, 2024 in which 2.6 mnt of iron ore got booked by the buyers out of which 1.09 mnt were lumps and 1.546 mnt comprised fines. Buyers didn't book the material in higher offers following the downtrend in downstream steel products. Meanwhile, bid prices fell up to INR 850/t for the majority of lots against OMC's January auction.
  
  
• Mixed sponge prices: Sponge iron prices in Raipur, Raigarh, Hyderabad and Ramgarh dropped by INR 150-1,000/tonne (t) in February, 2024 amid fall in finished steel sale. However, sponge iron prices in Durgapur, Jharsuguda and Bellary increased by INR 400-1,250/t in this month. Bulk bookings from the buyers at lower offer had supported the sponge prices in the domestic market.
  
  

Pellex overview

The monthly average of BigMint's domestic pellet index, PELLEX, was assessed at INR 9,550/t, down by INR 300/t m-o-m in February. Pellex prices fell as buyers adopted a cautious approach to wait and watch rather than committing to purchase.

Outlook

Pellet trade volumes are anticipated to remain volatile in the coming month too, considering last month of current financial year.