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India: PELLEX falls marginally in recent deals

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Pellets

BigMint Bureau

199 Reads

16 Aug 2024, 20:05 IST

India: PELLEX falls marginally in recent deals

Raipur pellet offers remain unchanged

P-DRI, billet prices improves, remain under pressure

Market participants eye OMC's iron ore auction

Pellet prices in the Raipur region remained stable as buyers made purchases based on immediate needs. Major buyers adopted a wait-and-see approach, holding off on decisions until the upcoming OMC iron ore auction provides clearer pricing. Weak demand for finished steel continued to affect prices across other products.

BigMint's bi-weekly domestic pellet (Fe63%) index fell by INR 50/t to INR 8,950/t ($106/t) DAP Raipur as of 16 August, 2024, compared to 13 August. During this period, about 10,000 t of pellet (Fe63%) were traded in the Raipur region from a local producer at INR 9,150/t DAP Raipur. Additionally, 5,000 t of raw pellets (Fe62.5%) were sold by an eastern India-based producer at INR 8,500/t DAP Raipur.

Sources indicated that market participants remained cautious about pellet purchases due to market uncertainty. While a few Odisha-based producers have offered pellets at competitive prices, no additional transactions have been concluded by sponge makers. A local steelmaker shared: "Current dynamics in sponge and billet prices have deterred buyers from purchasing pellets. The market remained quiet this week with no significant deals reported. The OMC iron ore auction is expected to be scheduled for next week, following the extended weekend due to the festivities."

"Inquiries from Raipur buyers have decreased recently. Sellers are under pressure to offload material as supply has exceeded demand. This can be attributed to a significant decline in the export market and reduced demand from domestic downstream steel segments," a pellet producer from Odisha said.

Rationale:

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

Two (2) deals have been reported so far in this publishing window and considered for price calculation and accorded a 50% weightage for T1 trade.

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-

Pellet offers stable in Raipur: Raipur-based pellet producers have kept their offers stable for Fe 63% (+/-0.5) pellets at INR 9,100/t ($109/t) exw-Raipur. Still a few sellers were still not offering today.

Sponge iron prices up w-o-w: P-DRI prices inched up by INR 200/t ($2.5/t) w-o-w to INR 24,400/t ($291/t) exw Raipur on 16 August. Meanwhile, d-o-d, prices remained unchanged today. Market activity was subdued today, with fewer inquiries and only need-based purchase leading to moderate trade volumes.

Billet prices supportive w-o-w: Billet prices in Raipur increased by INR 100/t ($1/t) w-o-w to INR 38,300/t ($456/t) exw today, while prices remained stable d-o-d. No major deals concluded today as participants remained cautious ahead of festivity.

Outlook

According to BigMint's analysis, clarity on pellet prices in the Raipur region is expected to emerge after the OMC auction, which is anticipated next week. Tradable volumes may increase in the coming days as sponge makers are likely to purchase pellets based on their inventory levels and sponge prices.