India: PELLEX falls by INR 100/t following drop in offers

• Raipur-based pellet plants lower offers by INR 300/t this week
  
  
• Lack of deals weighs on prices
  
  

SteelMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, fell by INR 100/t to INR 10,000/t DAP Raipur on 5 January 2024 compared to the last assessment on 2 January 2023. A deal of 2,000 t was reported at INR 10,050/t DAP Raipur in this publishing window.

However, a deal of around 15,000 t of higher-grade pellets (Fe66%) were reported at INR 11,800/t exw-Raipur recently.

The Raipur pellet market remained muted this week after the New Year holidays. Most buyers remained cautious and took a wait-and-watch stance amid higher pellet prices. As per sources, buyers may book bulk deals in the coming days as plants reduce pellet offers.

Market participants said: "Raipur pellet makers previously increased prices by INR 600/t following the increased bids in OMC's iron ore auctions. However, NMDC hiked iron ore offers only up to INR 250/t. The sluggish market for sponge iron and finished steel put pellet prices in Raipur under pressure. The market is also facing liquidity issues which resulted in lower trades in recent days."

Another market participant stated: "Buyers were not ready to book pellets at current offers as the market is facing liquidity problems and sales of finished steel are also low. End-users were booking finished steel at reduced prices which suppressed sponge prices too. We are currently operating our plants with the remaining inventory and expecting an improvement in market conditions."

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology Click here.
  
  
• One deal was reported so far this week, but not taken into account for price calculation and accorded 0% weightage for T1 trade.
  
  
• Ten (10) firm offers, bids, and indicative prices were heard. Nine (9) were taken for price calculation and given the balance 100% weightage.
  
  

Market highlights

• Raipur pellet offers down: Godawari Power and Ispat Ltd (GPIL) dropped pellet (Fe 63% +/-0.5) offers by INR 300/t ($4/t) to INR 10,300/t ($124/t) exw-Raipur on 4 January. Another major pellet player has also cut its offer by INR 300/t ($4/t) to INR 9,900/t ($119/t) exw yesterday.
  
  
• P-DRI prices in Raipur drop: SteelMint's P-DRI (FeM 80%) prices dropped by INR 150/t d-o-d today. However, assessment for sponge in Raipur increased by INR 950/t w-o-w to INR 27,350/t exw on 5 January. Sponge iron prices in India fell significantly today, ranging from INR 50 to 350/tonne in the major markets. This decline is attributed to downward market sentiments in the semi-finished steel segment, leading to weak buying activity and lower inquiries for sponge iron throughout the day.
  
  
• Billet prices in Raipur rise w-o-w: Billet prices in Raipur rose w-o-w by INR 950/t to INR 40,500/t exw on 5 January. However, prices fell by INR 150/t d-o-d. Raipur prices fell following the negative market sentiments in the northern region.
  
  

Outlook

The pellet prices in Raipur expected to remain stable at the current level following the expectation of improvement in the semi-finished and finished steel market. The increased export offers in the seaborne market also give support to domestic offers in the Raipur region.