India: PELLEX falls by INR 100/t on less trade, bid-offer disparity

SteelMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, fell by INR 100/t to INR 10,100/t DAP Raipur on 29 December, 2023 compared to the last assessment on 26 December. No deal was reported in this publishing window as bid-offer disparity prevailed. The bids were lower around INR 500/t against the pellet makers' offers.

The current raw pellet prices are too high for them to book material in bulk quantity. Sources informed that most of the buyers kept an eye on prices but remained in a wait-and-watch mode. On the other side, pellet makers also hold the offers amid pending dispatches. A source said the raw pellet prices are on northwards while sponge and finished steel prices are on a downtrend which forces buyers to take a backstep.

Sponge makers have sufficient inventory for the next two to three weeks. NMDC iron ore price revision is also round the corner. SteelMint's assessment for sponge P-DRI (FeM 80%) in Raipur decreased by INR 300/t w-o-w to INR 26,400/t exw on 29 December. Prices dropped by INR 100/t d-o-d today. Semi-finished steel demand was stable despite the general sluggishness in the market.

As per sources, NMDC Chhattisgarh will revise iron ore prices soon, with the miner likely to declare offers in the next few days.

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology Click here.
  
  
• No deal was reported so far this week, not taken into account for price calculation and accorded 0% weightage for T1 trade.
  
  
• Ten (10) firm offers, bids, and indicative prices were heard. Eight (8) were taken for price calculation and given the balance 100% weightage.
  
  

Market highlights

• Raipur pellet offers stable: GPIL pellet (Fe63.5% and Fe66%) offers remained stable at INR 10,600/t ($127/t) and INR 12,300/t ($148/t) exw-Raipur respectively. However, other pellet-makers' offers in Raipur remained stable at INR 10,200/t ($122/t) exw.
  
  
• Billet prices in Raipur fall w-o-w: Billet prices in Raipur dropped w-o-w by INR 250/t to INR 39,550/t exw on 29 December. However, prices inched up by INR 50/t d-o-d. A minor increase in buying activity was witnessed throughout the day as players expected some recovery in the market following the new year market opening.
  
  

Outlook

The current pellet prices are not suitable for sponge makers amid lower margins. As per sources, pellet prices may be revised in the central region. However, the market will be clearer post-NMDC iron ore price revision.