India: PELLEX falls INR 100/t ($1/t) following lower bids, steel price fluctuations

• Pellet deals slow amid festive season
  
  
• Sponge iron, billet prices drop w-o-w
  
  

Pellet offer from Raipur-based producers remained unchanged in the last couple of days while some Odisha-based sellers dropped their offers amid the recent fluctuation in sponge iron and finished steel prices in central and eastern regions. Moderate transaction volumes were seen in the Raipur region due to the onset of the festive season that saw trade slowing down.

BigMint's bi-weekly domestic pellet (Fe63%) index fell by INR 100/t ($1/t) to INR 10,100/t ($120/t) DAP Raipur on 11 October 2024 compared to the previous assessment on 8 October. During this publishing window, Raipur-based pellet producer sold around 5,000 t of pellets (Fe63%) at INR 10,100/t ($120/t) exw. Additionally, Odisha-based sellers concluded deals of around 10,000 t of pellets (Fe62.5%) at INR 9,700/t ($115/t) DAP Raipur.

An Odisha-based producer said "Pellet prices in Odisha have remained under pressure amid declining prices of sponge iron and finished steel, as well as reduced demand in international markets. However, some sellers kept pellet offers stable over the week. In the last couple of days, deals from the Odisha region decreased as buyers showed a lack of interest."

The recent festivals, including Navratri, Dussehra, and Durga Puja, also contributed to the slowdown in trade, as many buyers had already secured their pellet stocks in advance. "We made our purchases earlier, anticipating the holiday season slowdown," a steelmaker commented.

With inquiries for raw pellet purchases reduced, many market participants are adopting a wait-and-watch approach. "We're holding off further amidst existing inventories and are likely to resume buying until we see clearer trends in the finished steel market," a trader noted, reflecting the cautious sentiment prevailing in the market.

Factors driving PELLEX

• Pellet offers stable in Raipur: Raipur-based manufacturers kept their offers for Fe 63% (+/- 0.5%) pellets at INR 10,200-10,300/t ($121-123/t) exw-Raipur.
  
  
• Sponge iron prices fall w-o-w: P-DRI prices sharply fell INR 1,150/t ($14/t) w-o-w to INR 27,900/t ($332/t) exw-Raipur on 11 October. Meanwhile, prices decreased by INR 200/t ($1/t) d-o-d. Sponge iron prices declined due to a downtrend in semi-finished and finished steel, driven by low demand as buyers remained hesitant amid the festive season.
  
  
• Billet prices decrease w-o-w: Billet prices in Raipur dropped by INR 900/t ($11/t) w-o-w to INR 41,000/t ($488/t) exw, while remaining stable d-o-d. Trading activities remained subdued on Friday due to the festive atmosphere in the market. Sellers further lowered offers, particularly in the finished steel segment, due to a lack of purchase inquiries.
  
  

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
  
  
• Two (2) deals were reported in this publishing window, and both were taken into account for price calculation and accorded a 50% weightage for T1 trade.
  
  
• Fifteen (15) firm offers, bids, and indicative prices were heard. Nine (9) were taken for price calculation and given the balance 50% weightage.
  
  

Outlook

Pellet prices in Raipur are expected to become clearer next week after the holidays. Buyers may continue to purchase raw pellets starting next week, and the recent increase in raw material prices may support domestic pellet offers.