India: PELLEX falls marginally even though trade regains momentum

• NMDC lowers iron ore prices by INR 500/t
  
  
• Active pellet trades witnessed in Raipur
  
  
• Sponge iron, billet prices recover d-o-d
  
  

BigMint's bi-weekly domestic pellet (Fe63%) index inched down by INR 50/t to INR 9,550/t ($114/t) DAP Raipur on 2 July, 2024 compared to the last assessment on 28 June. Around 47,000 t of deals were recorded in this publishing window. Out of this, 20,000 t of pellet deals (Fe62.5% +/-0.5%) were recorded from eastern India at INR 9,100-9,200/t ($109-112/t) DAP Raipur and the remaining 27,000 t were recorded by Raipur-based players at INR 9,650/t ($116/t) DAP Raipur.

The pellet market in Raipur remained moderate over the last three-four days with some improvement in buying interest as buyers engaged in need-based purchases. Deals were concluded by both local traders as well as those in the neighbouring regions amidst restocking ahead of monsoons.

Odisha-based pellet producers are offering at INR 8,800-9,200/t (Fe 62.5%) DAP Raipur, largely stable. They sold a decent quantity of material in Raipur over the last couple of days.

A steelmaker said, "Sponge and billet prices recovered in the last week which encouraged buyers to purchase pellets. Active pellet purchases were witnessed in Raipur supported by improved market dynamics amid diminishing stocks".

A pellet producer said that some buyers are still in a wait-and-watch mode, delaying their purchases this week. The source expects a supportive market in the coming days, with deals likely to be concluded soon.

Additionally, NMDC Chhattisgarh has reduced iron ore prices for long-term agreement customers. NMDC decreased list prices of iron ore CLO (calibrated lump ore) and fines by INR 500/t ($6/t), BigMint learnt from sources. The company's prices are effective from 30 June. The miner has fixed prices of DR CLO (10-40mm, Fe67%) at INR 7,020/t ($84/t) and of iron ore fines (-10mm, Fe64%) at INR 5,110/t ($61/t) on FOR basis from its Bacheli complex. Prices include royalty, DMF and NMET charges.

Rationale:

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology Click here.
  
  
• Four (4) deals have been reported so far in this publishing window and all were considered for price calculation and accorded 50% weightage for T1 trade.
  
  
• Sixteen (16) firm offers, bids, and indicative prices were heard. Twelve (12) were taken for price calculation and given the balance 50% weightage.
  
  

Factors driving the PELLEX-

• Raipur pellet offers remain stable w-o-w: Raipur-based pellet makers has kept their offers stable for Fe 63%(+/- 0.5%) at INR 9,500-9,600/t ($115-116/t) exw-Raipur today.
  
  
• Sponge iron prices up INR 1,250/t w-o-w: P-DRI prices rose by INR 1250/t ($15/t) w-o-w to INR 26,250/t ($315/t) exw-Raipur on 2 July. On a d-o-d basis, prices improved by INR 500/t ($6/t). India's sponge iron market witnessed a rise in prices today in the range of INR 100-500/t ($1-6/t) in all locations amid rising steel prices followed by active spot trading.
  
  
• Steel billet prices rise INR 1,200/t w-o-w: Billet prices in Raipur significantly rose by INR 1,200/t ($14/t) w-o-w to INR 40,750/t ($488/t) exw today, while prices increased by INR 500/t ($6/t) on a d-o-d basis. The index continued to rise in the last couple of days following active demand from the end user.
  
  

Outlook

The market is expected to remain supportive with decent trading activity in the near term following the improvement in sponge iron and finished steel prices coupled with the expectation of improved buying interest by the steelmakers.

A market participant informed BigMint that pellet producers from neighboring regions are also selling pellets in Raipur at competitive prices. However, only a few steelmakers showed interest in local material because they had lower stocks in inventory and may receive quicker delivery compared to the plants based in Odisha.