India: PELLEX inches down in recent deals; market awaits OMC auction outcome

• Market activity remains moderate amid festive holiday
  
  
• Raipur pellet offers stable despite NMDC price reduction
  
  

Pellet prices in Raipur remained stable this week, with moderate trading activity observed in the market. Sellers maintained their offers even after NMDC's recent revision of iron ore prices, but buying interest remained subdued as no aggressive buying was witnessed in the region.

BigMint's bi-weekly domestic pellet (Fe63%) index inched down by INR 50/t to INR 9,400/t ($109/t) DAP Raipur on 14 January 2025 compared to the previous assessment on 10 January. Raipur-based steelmakers concluded around 22,000 t of pellet (Fe63%) deals at INR 9,150-9,650/t ($106-111/t) DAP from local producers.

A steel manufacturer commented, "The upcoming OMC iron ore auction (17 January) may point to emerging market sentiment and assess the viability of current prices. Sponge iron manufacturers remain uncertain about workable price levels, resulting in cautious market participation."

Raipur-based pellet-makers kept pellet offers for Fe63% (+/_0.5%) stable at INR 9,400/t ($109/t) exw. A few steelmakers kept away from the market today amid the Makar Sankranti festival which kept sentiments subdued.

A seller source stated, "We have not changed our prices, but inquiries from buyers are already low, and they are hesitant to make new trades. We have not heard of any deal being finalised between sellers in Odisha and Raipur buyers, as prices in the neighbouring regions are higher than our offers."

Need-based buying was concluded by buyers who required material on an urgent basis. A few Odisha-based producers offered pellets (Fe 62.5/63%) at INR 9,100-9,400/t DAP Raipur but failed to conclude the deals.

Additionally, the sponge and billet markets have faced downward pressure over the past few days, further dampening sentiment in the trade market. The pressure on sponge iron and billet prices is preventing buyers from actively engaging in pellet purchases right now.

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
  
  
• Three (3) deals have been reported so far in this publishing window, and two (2) are taken for calculations. Thus, the T1 trade category was accorded 50% weightage and not considered for price calculation.
  
  
• Sixteen (16) firm offers, bids, and indicative prices were heard. Thirteen (13) were taken for price calculation and given the balance 50% weightage.
  
  

Factors driving PELLEX

• Sponge iron prices down w-o-w: P-DRI prices inched down by INR 50/t ($0.5/t) w-o-w to INR 24,400/t ($282/t) exw-Raipur on 14 January. Meanwhile, prices rose by INR 100/t ($1/t) d-o-d today. Trades remained subdued with only a small quantity recorded in the second half trading session.
  
  
• Billet prices drop w-o-w: Billet prices in Raipur dropped by INR 250/t ($1/t) w-o-w to INR 39,000/t ($450/t) exw today. Furthermore, d-o-d, prices increased by INR 100/t ($1/t).
  
  

Outlook

According to BigMint analysis, pellet prices are likely to remain rangebound in the near term, with sellers possibly re-evaluating their pricing strategies once the OMC auction results are announced.