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India: PELLEX falls INR 200/t ($2.5/t) even as market awaits NMDC's iron ore price revision

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Pellets

BigMint Bureau

125 Reads

3 Dec 2024, 19:08 IST

India: PELLEX falls INR 200/t ($2.5/t) even as market awaits NMDC's iron ore price revision

Some Raipur producers reduce offers by INR 200/t ($2.5/t)

Sponge iron, billet prices drop INR 300-400/t ($4-5/t) w-o-w

Pellet prices in Raipur continue to remain subdued due to limited trading activity amid lack of buying interest from steelmakers. Local pellet producers, even after some relaxation in offers, reported no significant transactions due to a persistent bid-offer disparity.

Raipur-based pellet-makers cut their Fe63% (+/_0.5%) pellet offers by INR 300/t ($4/t) to INR 8.700-8,800/t ($103-104/t) exw. However, even after prices were slashed by the local sellers, bid-offer disparity was witnessed in the market.

BigMint's bi-weekly domestic pellet (Fe63%) index decreased by INR 200/t ($2.5/t) to INR 8,950/t ($106/t) DAP Raipur on 2 December compared to the previous assessment on 29 November. No deals were concluded in Raipur in this publishing window.

Some Odisha-based producers offered material to buyers in Raipur at INR 9,000-9,300/t ($107-113/t) (Fe62.5-63%) DAP. Odisha-based plants failed to fetch trades in Raipur region amid bid-offers disparity.

A Raipur-based seller said, "We are closely monitoring NMDC's price announcement, as it will significantly affect the pricing strategy in the region. The current prices do not align with our cost for sponge PDRI, especially given the pressure in the steel market. Those who have immediate requirements may purchase material at today's revised offers."

The decline in the sponge iron and steel markets affected liquidity and dampened trading sentiments. Sources indicate that both buyers and sellers are being cautious, awaiting clearer signals from NMDC.

Another steelmaker informed BigMint that Odisha-based pellet producers are continuing to offer pellets at higher prices for delivery to Raipur. These elevated rates have reduced transaction volumes, making it challenging for buyers in Raipur to secure deals.

Rationales

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

No deals have been reported so far in this publishing window. 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. Fourteen (14) were taken for price calculation and given the balance 100% weightage.

Factors driving PELLEX

Sponge iron prices drop w-o-w: P-DRI prices decreased by INR 450/t ($5/t) w-o-w to INR 24,450/t ($289/t) exw-Raipur on 3 December. Meanwhile, prices increased INR 200/t ($2.5/t) d-o-d today. Deals remained under pressure today in Raipur as market participants opted for a cautious stance.

Billet prices fall w-o-w: Billet prices in Raipur reduced by INR 400/t ($5/t) w-o-w to INR 38,350/t ($453) exw today. Furthermore, d-o-d, prices rose by INR 300/t ($4/t).

Outlook

According to BigMint, the outlook on pellet prices in Raipur will become clearer post NMDC iron ore price revision. The ongoing decline in the sponge iron and finished steel market may limit pellet trades in central India.