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India: PELLEX drops by INR 400/t ($5/t) on bid-offers disparity, falling sponge prices

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Pellets

BigMint Bureau

231 Reads

7 Jun 2024, 19:39 IST

India: PELLEX drops by INR 400/t ($5/t) on bid-offers disparity, falling sponge prices

Buying remains muted amid ample inventories

Pellet offers stable in Raipur, trading subdued

Bids drop amid lower landed offers from Odisha

BigMint's bi-weekly domestic pellet (Fe63%) index fell by INR 400/tonne ($5/t) to INR 10,600/t ($127/t) DAP Raipur on 8 June, 2024 compared to the last assessment on 4 June. This publishing window recorded a deal of 2,000 t in the Raipur region.

Pellet-buying interest in Raipur remained muted post-parliamentary election results. Buyers remained cautious about purchasing as they already stocked up enough for the next few weeks.

GPIL has kept pellet offers of Fe 63.5% and Fe 66% stable at INR 12,000/t ($144/t) and INR 13,500/t ($162/t) exw-Raipur, respectively. Other producers' offers also remained stable at INR 11,400-11,500/t ($137-138/t) exw.

Bids and offer disparity prevailed in the market while some Odisha-based pellet producers kept Raipur landed prices at INR 10,000-10,600/t ($119-127/t) DAP Raipur but no deals were recorded in this publishing window.

A market participant said: "The market did not strengthen post-election results as no major trading activity was witnessed in the region. Buyers were not interested in booking material at prevailing offers in Raipur as they are waiting for price correction from the sellers."

The demand for raw pellets was very weak as prices of sponge and finished steel continued to fall after the election results. Market participants commented that trading activity in the steel industry may return to normal from next week onwards. Steelmakers were hesitant to conclude deals this week due to lack of price clarity.

Steel market updates

Sponge P-DRI fall w-o-w: P-DRI prices fell by INR 600/t ($7/t) w-o-w to INR 27,700/t ($331-332/t) exw on 7 June. Meanwhile, prices dropped by INR 150/t ($2) d-o-d. Trading activity increased on improved demand at lower prices, especially in the central region (Raipur and Raigarh) which saw around 18,000 tonnes of transactions which holds 42% of the total trade volumes today, which was then followed by the eastern region.

Billet prices down w-o-w: Billet prices in Raipur fell by INR 250/t ($3/t) w-o-w to INR 44,300/t ($531/t) exw today, while prices increased by INR 100/t ($1/t) on a d-o-d basis.

Rationale

PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology Click here.

One (1) deal was reported so far in this publishing window and was not considered for price calculation and accorded a 0% weightage for T1 trade.

Twenty-one (21) firm offers, bids, and indicative prices were heard. Thirteen (13) were taken for price calculation and given the balance 100% weightage.

Outlook

Pellet prices in Raipur may remain volatile due to a drop in sponge and finished steel prices, while buyers already have stocks for the next few weeks. Additionally, NMDC's supply has returned to normalcy ahead of pre-monsoon restocking.