India: PELLEX falls INR 100/t on thin trading, decline in sponge iron prices

• Pellet offers stable in Raipur
  
  
• Sponge iron, billet prices in free fall
  
  
• Bid-offer disparity persists in market
  
  

BigMint's bi-weekly domestic pellet (Fe 63%) index inched down by INR 100/t to INR 9,500/t DAP ($114/t) Raipur on 12 April 2024 compared to the last assessment on 9 April. No major deals were witnessed from Raipur amid a cautious approach from buyers. However, buyers booked around 3,000 t pellets at INR 9,300/t ($110/t) DAP Raipur from neighbouring regions.

Producers in Raipur remained muted over the last two to three days amid lower buying interest following bulk bookings at lower prices previously. Buyers in the market booked a decent quantity of material before the price hike led to trade volumes dropping. Now they are holding positions and reluctant to book any material.

Godawari Power and Ispat Ltd (GPIL) has kept offers stable for Fe 63.5% and Fe 66% (+/-0.5) at INR 9,700/t ($117/t) and INR 11,000/t ($135/t) exw-Raipur, respectively. Other manufacturers' offers also remained stable at INR 9,400-9,600/t exw ($133-114/t) Raipur.

A buyer from Raipur said, "Most steelmakers have booked enough material last week, so trading activity remained quiet this week. We are avoid buying and waiting for clearer market directions. Offers from the neighbouring regions (on a landed basis) are almost equal to those prevailing in Raipur."

A few market sources informed that buying is on hold as sponge iron and finished steel prices have decreased continuously this week after the sharp increase last week. So, buyers' bids remained around INR 200-400/t lower than offers by manufacturers.

Notably, NMDC's iron ore price revision and OMC's auction are also approaching and the big miners may revise prices in the near term, as per sources.

Relevant market snapshots

• Sponge P-DRI prices drop: BigMint's P-DRI (FeM 80%) prices declined by INR 1200/t ($14/t) w-o-w to INR 28,550/t ($342/t) exw on 12 April. Meanwhile, prices dropped INR 250/t ($3/t) d-o-d. Market participants are maintaining a cautious outlook, anticipating further correction in the near term due to unsupportive market sentiments.
  
  
• Billet prices fall: Billet prices in Raipur fell by INR 1200/t ($14/t) to INR 42,000/t ($503/t) exw on 12 April against 5 April. Prices decreased by INR 200/t ($2.5/t) d-o-d. The index showed a slight decline primarily due to limited buying activity in the semi-finished and finished steel segments. With demand remaining soft, some downward adjustments in offers in the spot market were seen.
  
  

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology Click here.
  
  
• One (1) deal was reported so far in this publishing window but not taken into account for price calculation and accorded 0% weightage for T1 trade.
  
  
• Thirteen (13) firm offers, bids, and indicative prices were heard. Eight (8) were taken for price calculation and given the balance 100% weightage.
  
  

Outlook:

Pellet prices in Raipur are expected to remain under pressure in the near term as sponge iron and finished steel prices continue to move south which may create pressure in the market. NMDC's iron ore prices revision will also ne keenly watched.