India: PELLEX inched down by INR 50/t ($1)* amid lack of deals, market awaits NMDC iron ore prices revision

• Bid-offers disparity weighs on deals
  
  
• Sponge iron, billet prices fall sharply w-o-w
  
  

The Raipur pellet market remained under pressure this week as steelmakers stayed on the sidelines, waiting for price clarity. With no deals reported, market participants noted a cautious sentiment driven by the recent sharp drop in sponge PDRI and steel prices.

BigMint's bi-weekly domestic pellet (Fe63%) index inched down by INR 50/t ($0.5/t) to INR 9,150/t ($108/t) DAP Raipur on 29 November compared to the previous assessment on 22 November. Deals remained absent in both local and neighbouring pellet-producing regions 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. Although a few Raipur buyers wanted to procure Odisha material at INR 8,500/t DAP deals failed to materialise amid bid-offer disparity.

A local steelmaker said, "The recent dip in sponge P-DRI and steel prices have left us in a wait-and-watch mode. We anticipate further corrections before making any purchases. Demand is subdued amid falling steel prices."

Another buyer said, "Sellers are holding back offers in anticipation of the upcoming iron ore price revision by NMDC, expected in early December. The NMDC price revision will play a pivotal role in determining the market direction. Buyers are hesitant to commit before the new rates are announced."

Market sources believe that fresh deals may emerge once NMDC revises its iron ore prices. If the iron ore prices are reduced, it could trigger some active trades, with pellet prices being adjusted accordingly to align with market expectations.

Notably, the NMDC Chhattisgarh iron ore auction of over 300,000 t iron ore received a poor response as 95% of the material remained unsold on 27 November which indicates bearish market sentiment in the central Indian region.

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.
  
  
• Eighteen (18) firm offers, bids, and indicative prices were heard. Eleven (11) were taken for price calculation and given the balance 100% weightage.
  
  

Factors driving PELLEX

• Pellet offers stable in Raipur: Raipur-based pellet makers kept their Fe63% (+/_0.5%) pellet offers stable w-o-w at INR 9,000-9,100/t ($107-108/t) exw. GPIL offered Fe63.5% and Fe65.5% grade pellets at INR 9,600/t ($114/t) and INR 10,800/t ($128/t) exw.
  
  
• Sponge iron prices drop w-o-w: P-DRI prices decreased by INR 900/t ($11/t) w-o-w to INR 24,450/t ($289/t) exw-Raipur on 29 November. Meanwhile, prices fell INR 150/t ($2/t) d-o-d today.
  
  
• Billet prices fall sharply w-o-w: Billet prices in Raipur reduced by INR 1,200/t ($14/t) w-o-w to INR 38,200/t ($452) exw today. Furthermore, d-o-d, prices declined by INR 500/t ($6/t). Today's market saw yet another slump, mostly as a result of lower demand for semi-finished and finished steel. Demand stayed low, which can be explained by the fewer inquiries that were answered.
  
  

Outlook

According to BigMint, pellet prices in Raipur are expected to remain under pressure in the coming days due to bearish market sentiment. Steelmakers may get price clarity and buying level after the iron ore price revision by NMDC.

*Correction: Heading revised to INR 50/t, previously misstated as USD.