India: PELLEX falls INR 100/t ($1/t) amid muted market sentiments

• No deal concluded at current offers this week
  
  
• Sponge iron, billet prices fall w-o-w
  
  

Pellet prices in Raipur continued to face downward pressure this week driven by muted demand and falling sponge iron and semi-finished steel prices. Market activity was subdued, further impacted by year-end holidays, which kept participants cautious about making new purchases.

BigMint's bi-weekly domestic pellet (Fe63%) index fell by INR 100/t ($1/t) to INR 9,250/t ($108/t) DAP Raipur on 27 December compared to the previous assessment on 24 December. No deal was concluded in this publishing window.

A market participant commented: "Sponge iron makers highlighted a growing disparity between bid and offer prices. The workable price for raw pellets has dropped below current offers, making deals difficult. Buyers are reluctant to stock up at prevailing rates, hoping for further correction in the near term."

Raipur-based pellet-makers kept their offers for pellet Fe 63% (+/_0.5%) stable at INR 9,200-9,300/t ($109-110/t) exw.

Additionally, pellet offers from Odisha did not attract buyers in Raipur due to high prices. Local transportation costs and market pressures are making Odisha materials unattractive in Raipur.

A buyer informed, "The decline in sponge iron and steel prices has significantly weighed on pellet market sentiment, with participants adopting a wait-and-watch approach. The continuous downtrend in steel has created uncertainty, and buyers are hesitant to commit new purchases."

As the New Year approaches, market players expect subdued demand and price volatility to persist. A clearer picture of price trends will likely emerge only after the holiday season, as trading activity resumes in full swing.

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 not been taken for calculations. Thus, the T1 trade category was accorded 0% weightage and not considered for price calculation.
  
  
• Twenty-two (22) firm offers, bids, and indicative prices were heard. Nineten(19) were taken for price calculation and given the balance 100% weightage.
  
  

Factors driving PELLEX

• Sponge iron prices fall w-o-w: P-DRI prices decreased by INR 550/t ($7/t) w-o-w to INR 24,400/t ($285/t) exw-Raipur on 27 December. Meanwhile, prices dropped by INR 100/t ($1/t) d-o-d today. In an uncertain market environment, buyers were cautious, resulting in a decline in sponge iron prices. They refrained from making significant commitments due to concerns about market fluctuations, which contributed to modest transaction volumes.
  
  
• Billet prices drop w-o-w: Billet prices in Raipur fell by INR 450/t ($5/t) w-o-w to INR 38,900/t ($455/t) exw today. Furthermore, d-o-d, prices fell by INR 50/t ($1/t). Moderate trade activity recorded at the dropping prices in the 2nd half of today's trading session.
  
  

Outlook

According to BigMint, Pellet prices are expected to remain volatile over the next few days. Steelmakers are likely to avoid bulk purchasing at the current prices due to weak market sentiments.