India: PELLEX remains stable after Union Budget but trades muted

• Pellet offers stable but buying interest weak
  
  
• Sponge iron and billet prices fall w-o-w
  
  

The iron ore pellet market in Raipur has remained stable over the past few days following the Union Budget. However, after a recent price increase by local pellet manufacturers last week, trading activity has slowed. Steelmakers are now focusing on making immediate purchases instead of engaging in bulk transactions.

BigMint's bi-weekly domestic pellet (Fe63%) index remained stable at INR 9,900/t ($115/t) DAP Raipur on 4 February 2025 compared to the previous assessment on 31 January. Trade activity slowed down after an 8,000 t pellet (Fe63%) deal was recorded at INR 9,950/t DAP Raipur concluded by a local producer.

Pellet-makers' offers in Raipur for Fe63% (+/_0.5%) remained stable at INR 9,700-9,900/t ($113-115/t) exw. Odisha-based plants offered pellets to Raipur at INR 9,500-9,900/t ($110-115/t) DAP, but buyers are not interested in purchasing material from outside Raipur.

Furthermore, Odisha-based pellet producers have struggled to secure deals in the Raipur market due to higher prices. Buyers continue to prefer locally available material and are purchasing to meet immediate needs, thereby keeping demand for pellets from Odisha subdued.

A Raipur-based buyer commented: "Odisha pellets are expensive compared to local supplies. Demand is not aggressive in the market and trade activity has slowed due to cautious market sentiments post-Budget. The drop in sponge and billet prices has also kept buyers on the sidelines."

Sponge iron and semi-finished steel prices remained under pressure over the past week, with market participants adopting a wait-and-watch approach after the Budget announcement. Overall, market activity remains muted, with buyers proceeding cautiously amid bid-offer disparity.

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
  
  
• One (1) deal has been reported so far in this publishing window and was taken for calculations. Thus, the T1 trade category was accorded 50% weightage.
  
  
• Eighteen (18) firm offers, bids, and indicative prices were heard. Fourteen (14) were taken for price calculation and given the balance 50% weightage.
  
  

Factors impacting pellet prices

• Sponge iron tags drop w-o-w: P-DRI prices fell by INR 150/t ($2/t) w-o-w to INR 24,750/t ($284/t) exw-Raipur on 4 February. Meanwhile, prices decreased by INR 150/t ($2/t) d-o-d today. Sponge iron prices fell amid the lack of buying interest.
  
  
• Billet prices fall w-o-w: Billet prices in Raipur decreased by INR 650/t ($8/t) w-o-w to INR 38,850/t ($448/t) exw today. Furthermore, d-o-d, prices moved down by INR 300/t ($4/t). The index witnessed a decline today due to limited buying, driven by downward market sentiments and weakening finished steel demand.
  
  
• Active pellet export deals continue: A domestic pellet-maker concluded an export deal for around 50,000 t of pellets (Fe 63%, 2% AL2O3) at $108/t FOB India recently, sources informed BigMint. Last week, an export deal was concluded at a similar price level.
  
  

Outlook

According to BigMint's analysis, trade activity may remain at a moderate level in the near term as market sentiments are currently weak. Pellet prices are expected to remain volatile following bid-offer disparity and the downward trend in finished steel tags.