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India: PELLEX falls INR 100/t ($1/t); trades remain moderate

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Pellets

BigMint Bureau

96 Reads

13 Dec 2024, 19:13 IST

India: PELLEX falls INR 100/t ($1/t); trades remain moderate

Limited pellet deals heard in Raipur

Sponge iron, billet prices drop w-o-w

Pellet prices in Raipur have remained under pressure over the past few days, with buying activity subdued amid weak market sentiments. The recent decline in sponge iron and steel prices have further dampened buyer interest leading to a drop in transactions in the last two to three days.

BigMint's bi-weekly domestic pellet (Fe63%) index decreased by INR 100/t ($1/t) to INR 9,050/t ($107/t) DAP Raipur on 13 December compared to the previous assessment on 10 December. A buyer booked 5,000 t of pellets at INR 8,950/t DAP Raipur from local pellet producers.

A market participant commented: "Sponge iron plants in Raipur had already booked need-based inventories at the beginning of the week, reducing the urgency for additional purchases. The current downtrend in the steel market has made the steel players cautious about aggressive pellet procurement".

Raipur-based pellet makers kept offers stable for Fe 63% (+/-0.5%) pellets at INR 8,900-9,000/t ($105-106/t) exw. Godawari Power & Ispat opened pellet offers for Fe63.5% and Fe65% at INR 9,100/t ($107/t), and INR 10,300/t ($121/t) exw, respectively.

Meanwhile, no deals have been reported from Odisha for delivery to Raipur over the last two weeks. Buyers preferred competitive offers from local Raipur-based pellet manufacturers, citing logistical and pricing advantages. The local plants are offering better rates, making Odisha material less attractive for buyers.

Adding to the market's uncertainty, NMDC is yet to revise its iron ore prices for December deliveries. Buyers are now waiting for the Odisha Mining Corporation's (OMC) base price announcement for its iron ore auction which is likely to be scheduled next week. This is expected to provide better price clarity.

Rationale

PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.

One (1) deal has been reported so far in this publishing window, and was taken for calculations. Thus, the T1 trade category was accorded 50% weightage and not considered for price calculation.

Sixteen (16) firm offers, bids, and indicative prices were heard. Eleven (11) were taken for price calculation and given the balance 50% weightage.

Factors driving PELLEX

Sponge iron prices fall w-o-w: P-DRI prices remained fell by INR 500/t ($6/t) w-o-w to INR 24,400/t ($288/t) exw-Raipur on 13 December. Meanwhile, prices fell by INR 50/t ($0.5/t) d-o-d today.

Billet prices drop w-o-w: Billet prices in Raipur decreased by INR 250/t ($3/t) w-o-w to INR 38,650/t ($456) exw today. Furthermore, d-o-d, prices rose by INR 250/t ($3/t). The index saw a slight uptick today driven by fluctuating market trends and the influence of trends in the neighbouring regions. An upward momentum in the market during the latter half of the trading session contributed to a modest improvement in buying activity both in the semi-finished and finished steel segments.

Outlook

According to BigMint, the pellet market may remain volatile in the coming days amid fluctuations in sponge iron and steel prices. The upcoming OMC iron ore auction and NMDC price revision will offer better price clarity to market participants.