India: PELLEX remains largely stable despite low market activity

• Sponge P-DRI, billet prices remain supported
  
  
• Market still in festive mood, absence of deals prevails
  
  

The pellet market remained stable this week amid a significant slowdown seen in trading activity during the Diwali festival. Limited engagement from market participants contributed to a largely steady market environment.

BigMint's bi-weekly domestic pellet (Fe63%) index fall by INR 50/t ($1/t) to INR 9,950/t ($118/t) DAP Raipur on 5 November compared to the previous assessment on 1 November. No deal was recorded in this publishing window as several market participants remained absent due to the ongoing festive season.

According to market sources, steelmakers are focusing on offloading their existing inventories, but buyer activity remains muted due to the prevailing festive sentiment. This has kept new transactions limited, adding to market sluggishness.

Additionally, fluctuations in prices of sponge iron and finished steel have exerted downward pressure on pellet prices. Both sellers and buyers are adopting a cautious approach.

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology Click here.
  
  
• One deal was reported so far in this publishing window and considered for price calculation and accorded 50% weightage for T1 trade.
  
  
• Thirteen (13) 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 9,800-9,900/t ($117-118/t) exw-Raipur.
  
  
• Sponge iron prices stable: P-DRI prices increased marginally by INR 50/t ($0.5/t) w-o-w to INR 26,150/t ($311/t) exw Raipur on 29 October. Significant bookings within this price range were reported even as spot sales were seen in various locations.
  
  
• Billet prices rise w-o-w: Billet prices in Raipur rose by INR 100/t ($1/t) w-o-w to INR 39,350/t ($468/t) exw today. However, d-o-d, prices increased by INR 300/t due to improved sales.
  
  

Outlook

According to BigMint analysis, pellet prices in Raipur are expected to remain volatile in the near term. However, improved trading activity is expected post Diwali holidays.