India: PELLEX falls by INR 200/t ($2.5/t) in recent trades, decline in offers

• Raipur pellet offers fall by INR 400-500/t ($5-6/t)
  
  
• Over 80,000-t pellet deals seen in Raipur region
  
  
• P-DRI, billets sharply recover on improved trade
  
  

BigMint's bi-weekly domestic pellet (Fe63%) index dropped by INR 200/t ($2.5/t) to INR 9,600/t ($115/t) DAP Raipur on 28 June, 2024 compared to the last assessment on 25 June. This publishing window has around 83,500 t deals of raw pellets. Out of this, 43,500 t of pellet deals were recorded from eastern India at INR 9,100-9,300/t ($109-112/t)DAP Raipur and the remaining 40,000 t were recorded by local Raipur-based players at INR 9,650/t ($116/t)DAP Raipur.

Local pellet producers dropped their offers by INR 400-500/t ($5-6/t) today so some buyers booked from the local plants too. The market witnessed a significant trade boost after the price reduction by the Raipur pellet producers.

A steelmaker said, "The sponge market improved in the last two days which encouraged buyers to place new pellet orders. Some buyers purchased need-based quantities from both local Raipur and neighbouring plants. The local pellet producers dropped their offers today which supported the market sentiments in Raipur as trades were significantly increased."

As per sources, buyers have been waiting for the price reduction from local plants since the last few days. Pellet producers were forced to drop the offers as buyers were not ready to book material at over INR 9,500/t exw-Raipur. Some more deals may conclude as sponge makers will book material to stock up for the monsoon at the current prices.

Rationale:

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology Click here.
  
  
• Three (3) deals have been reported so far in this publishing window and all were considered for price calculation and accorded 50% weightage for T1 trade.
  
  
• Twenty (23) firm offers, bids, and indicative prices were heard. Fifteen (15) were taken for price calculation and given the balance 50% weightage.
  
  

Factors driving the PELLEX-

• Raipur pellet offers drop INR 400-500/t ($5-6/t): Raipur-based pellet makers have reduced their offers for Fe 63%(+/- 0.5%) by INR 400-500/t ($5-6/t) to INR 9,500-9,600/t ($119-120/t) exw-Raipur today.
  
  
• Sponge prices up INR 450/t d-o-d: P-DRI prices rose by INR 450/t ($17/t) w-o-w to INR 25,650/t ($308/t) exw-Raipur on 28 June. On a w-o-w basis, prices dropped by INR 150/t. Bulk bookings were seen across regions today, which led to a significant rise in daily spot trade volumes. As per BigMint data, around 53% of total deals today were reported from central India.
  
  
• Steel billet prices rise by INR 750/t today: Billet prices in Raipur significantly rose by INR 750/t ($9/t) w-o-w to INR 40,650/t ($488/t) exw today, while prices decreased by INR 650/t ($1/t) on a d-o-d basis. The index continued its downtrend with continuous correction observed over the past few days, reaching a new four-month low.
  
  

Outlook

The market is expected to remain supportive with some decent trading activity next week as buyers may book material for the monsoon. The improvement in sponge prices may also boost market confidence in the near term.

A pellet producer said that the rise in sponge prices for the last two days has already supported the market but it will be interesting to watch the sustainability of the sponge and finished steel prices. Trades may improve next week if these downstream commodities look positive in the near term.