India: PELLEX falls to 6-month low in recent trades at lower offers

• Raipur pellet offers drop by INR 200/t today
  
  
• Active deals recorded from buyers
  
  
• Subdued export market weighed on offers
  
  

BigMint's bi-weekly domestic pellet (Fe 63%) index decreased by INR 150/t to INR 9,150/t DAP ($109/t) Raipur on 5 March 2024 compared to the last assessment on 1 March. The PELLEX index recorded an over six-month low, previously; it was seen in the middle of August 2023. Total deals of 40,000 t of pellets were recorded at INR 9,150-9,250/t DAP for Fe 63 grade from Raipur in this publishing period.

The pellet makers in Raipur witnessed active deals this week after drop in the offers. Subdued export offers which created pressure followed by drop in domestic demand forced Raipur pellet makers to cut offers. BigMint's India pellet (Fe 63%, 3% Al) export (FOB east coast) index fell by $4/t to $108/t on 28 February 2024. The index was recorded at over four-month low, previously; it was observed in the first half of October 2023. However, sponge and billet markets showed a positive response in the last one week.

Godawari Power and Ispat Ltd (GPIL) has decreased pellet (Fe 63.5% +/-0.5) offers by INR 200/t ($2/t) to INR 9,200-9,300/t ($111-112/t) exw-Raipur today. Other major pellet makers from Raipur have also reduced offers by INR 200/t ($2/t) to INR 8,900-9,000/t ($107-108/t) exw today.

A buyer informed, "Bids were INR 200-300/t less from buyers against the offers in the last few days. Those who had sufficient inventory didn't seem to hurry to book material. This resistance from buyers may have resulted in a drop in pellet offers."

Notably, NMDC's number of rakes for carrying iron ore to Chhattisgarh-based units totaled 62 (0.24 million tonnes) in February, marking a 7% rise from the 58 (0.22 mnt) recorded in January.

A market observer said that the current market is very unpredictable following the volatility in the price trends. Before the financial year came to an end, everyone wanted to clear the remaining stock and this may increase the market activity in the coming days.

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodologyClick here.
  
  
• Three (3) deals were reported so far in this publishing window and all have been taken into account for price calculation and accorded 50% 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 50% weightage.
  
  

Market highlights

• Sponge P-DRI rises w-o-w: BigMint's P-DRI (FeM 80%) prices increased by INR 500/t stable w-o-w at INR 26,600/t exw on 5 March. The assessment for sponge iron in Raipur rose by INR 200/t d-o-d today. Only needs-based purchases were made today, as there was only minimal market activity due to participants having placed enough orders over the previous few days.
  
  
• Billet prices up w-o-w: Billet prices in Raipur improved by INR 700/t w-o-w to INR 39,950/t exw on 5 March. Meanwhile, prices increased by INR 250/t d-o-d. The index rose today due to the slight uptick in spot prices attributed to an improved response from buyers in yesterday's trading session. This led to continuous bookings in semi-finished steel.
  
  

Outlook

Pellet prices in the Raipur market are expected to remain range-bound in the coming days if the sponge market remains positive in the next few days and are awaiting NMDC's iron ore price revision.