India: PELLEX falls by INR 50/t, market awaits for NMDC's iron ore price revision

• Few Raipur pellet plants close sales
  
  
• Sponge iron, billets prices sharply drop w-o-w
  
  

The pellet market in Raipur has remained quiet over the past few days due to lack of interest from steelmakers. Some pellet producers have already sold material for the next few weeks and have therefore closed their sales. Both buyers and sellers are not in a rush to make deals, as sponge makers are also carrying a decent inventory. Therefore, local pellet producers kept offers unchanged.

BigMint's bi-weekly domestic pellet (Fe63%) index inched down by INR 50/t to INR 9,050/t ($110/t) DAP Raipur on 6 August, 2024 compared to the last assessment on 2 August. A pellet producer from nearby Raipur sold around 30,000 t of pellets (Fe63%) at INR 9,000/t exw in this publishing window. A few sellers are out of the market and are not offering pellets.

Sources said that a few Odisha-based producers offered Fe 62.5% pellet material at INR 8,500/t DAP Raipur due to selling pressure but no transaction was heard. The eastern region pellet prices dropped around INR 200-400/t w-o-w due to lower demand as buyers hesitated to buy material in the downward market movement.

A steelmaker said that major buyers in the region have sufficient pellets in the inventory and are not in a hurry to purchase material. Buyers opted for a wait-and-watch mode due to the downtrend steel market sentiments. NMDC iron ore prices for August delivery are yet to be revised by the miners which may bring clarity for pellet prices also."

Rationale:

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology Click here.
  
  
• No deal has been reported so far in this publishing window and has not been considered for price calculation and accorded a 0% weightage for T1 trade.
  
  
• Twenty-two (22) firm offers, bids, and indicative prices were heard. Twenty (20) were taken for price calculation and given the balance 50% weightage.
  
  

Factors driving PELLEX-

• Pellet offers stable in Raipur: Raipur-based pellet producers have kept their offers stable for Fe 63% (+/-0.5) pellets at INR 9,100/t ($109/t) exw-Raipur. Few prominent producers didn't offer in the market.
  
  
• Sponge iron prices drop INR 900/t w-o-w: P-DRI prices fell by INR 900/t w-o-w to INR 24,450/t ($291/t) exw Raipur on 6 August. However, d-o-d, prices dropped by INR 200/t ($2-2.5/t). Moderate sponge deals were recorded at reduced prices in the second half in the Raipur market.
  
  
• Billet prices down by INR 1300/t w-o-w: Billet prices in Raipur decreased by INR 1,300/t ($15-15.5/t) w-o-w to INR 38,350/t ($456-457/t) exw today, while prices fell by INR 150/t ($2.5/t) d-o-d. However, limited deals were seen for billets by market participants.
  
  

Outlook

According to BigMint's analysis, pellet prices in Raipur are expected to remain volatile as the market will get clear dynamics post-NMDC iron ore price revision. However, the pressure from the sponge and finished steel market may keep pellet prices southward. The neighbouring market has also cut their pellet offers in recent days.