India: PELLEX falls by INR 200/t ($2.5/t) in recent deals

• Around 25,000 t pellet deals concluded
  
  
• Offers from Raipur-based producers remain stable
  
  
• Price volatility continues in sponge iron, billet markets
  
  

BigMint's bi-weekly domestic pellet (Fe63%) index dropped by INR 200/t ($2/t) to INR 9,150/t ($110/t) DAP Raipur on 12 July, 2024 compared to the last assessment on 9 July. Around 25,000 t of deals for pellets (Fe 62.5+/-0.5%) were concluded from Odisha and Raigarh by Raipur-based steelmakers at INR 8,500-9,000/t DAP Raipur in this publishing window.

Pellet purchases remained moderate in Raipur region as a few sponge iron producers bought pellets from Odisha and nearby regions owing to price competitiveness. Raipur-based pellet plants have kept their offers stable.

A steelmaker said, "Major buyers booked as per their needs from the neighbouring region as they were getting at lower prices compared to local offers. However, some sponge makers placed inquiries for pellets with local players but their bids remained lower by around INR 300-500/t against current offers."

A market participant said that based on buyers' inquiries, buyers wanted to purchase material in the range of INR 8,700-8,900/t DAP Raipur which kept the local pellet makers under pressure.

Rationale:

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology Click here.
  
  
• Three (3) deals of 25,000t were reported so far in this publishing window and two (2) were considered having total volume of 10,000t for price calculation and accorded 50% weightage for T1 trade.
  
  
• Twenty-five (23) firm offers, bids, and indicative prices were heard. Twenty (20) were taken for price calculation and given the balance 50% weightage.
  
  

Factors driving PELLEX-

• Raipur pellet offers stable: Raipur-based pellet makers kept offers stable for Fe 63%(+/-0.5%) at INR 9,200-9,300/t ($110/t) exw-Raipur today.
  
  
• Sponge iron prices stable w-o-w: P-DRI prices remained largely stable w-o-w at INR 25,750/t ($308/t) exw-Raipur on 12 July. However, d-o-d, prices rose by INR 300/t ($4/t) today. Trading activity remained sluggish as participants adopted a cautious approach and did not purchase pellets at higher prices.
  
  
• Billet prices fall by INR 200/t w-o-w: Billet prices in Raipur dropped INR 300/t ($3-4/t) w-o-w to INR 39,500/t ($473/t) exw today, while prices rose by INR 250/t ($3/t) d-o-d. Demand from end-users was minimal and no aggressive trades were recorded today even after the rise in prices. Some buyers booked on the basis of need.
  
  

Outlook

Pellet trades in Raipur may remain volatile amid fluctuations in sponge iron prices. A few buyers are opting for iron ore lumps due to cost effectiveness while some are waiting for price clarity and may book pellets in the near term.

A sponge producer said, "Sponge iron and finished steel prices showed decent recovery today but no aggressive deals were witnessed. If the prices of these commodities sustain next week some decent buying interest may be seen for pellets."