India: PELLEX remains stable ahead of OMC iron ore auction, buyers cautious

• Sponge, billet prices rise w-o-w
  
  
• Pellet deals remain dull in Raipur
  
  

Pellet prices in the Raipur region remained largely steady as market participants adopted a cautious stance ahead of the Odisha Mining Corporation (OMC) iron ore auction scheduled for tomorrow. Trading volumes have been muted as buyers await price clarity post-auction. Further uncertainty looms with NMDC yet to announce its iron ore prices for December deliveries.

BigMint's bi-weekly domestic pellet (Fe63%) index remained stable at INR 9,050/t ($107/t) DAP Raipur on 17 December compared to the previous assessment on 13 December. No pellet deals were concluded by Raipur-based steelmakers in this publishing window.

A market participant commented, "Pellet producers have kept their prices steady despite weak demand, opting to prioritize fulfilling previously contracted orders. They are maintaining these prices due to production costs, even though market activity remains slow because of higher raw material prices."

Raipur-based pellet makers kept offers stable for Fe 63% (+/-0.5%) pellets at INR 8,900-9,000/t ($105-106/t) exw. Godawari Power & Ispat opened pellet offers for Fe63.5% and Fe65% at INR 9,100/t ($107/t), and INR 10,300/t ($121/t) exw, respectively.

A trader in Raipur commented, "Despite the slight improvement in sponge PDRI and steel market sentiments, inquiries for pellet purchases have failed to materialize as buyers find current offers unviable. Pellet prices are steady, but prevailing offers are still beyond our expectations. Buyers are hesitant until clarity emerges post-the OMC auction."

OMC has offered 2.26 million tonnes of iron ore for the upcoming auction, which is expected to set the tone for pellet prices in the near term. Market participants anticipate a potential easing of tradable pellet levels post-auction, which could lead to improved buying interest.

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
  
  
• No deal has been reported so far in this publishing window, and not taken for calculations. Thus, the T1 trade category was accorded 0% weightage and not considered for price calculation.
  
  
• Sixteen (16) firm offers, bids, and indicative prices were heard. Twelve (12) were taken for price calculation and given the balance 100% weightage.
  
  

Factors driving PELLEX

• Sponge iron prices up w-o-w: P-DRI prices increased by INR 450/t ($5/t) w-o-w to INR 24,850/t ($293/t) exw-Raipur on 17 December. Meanwhile, prices remained stable d-o-d today. Today improvement in buying activity was seen due to a positive outlook in markets in northern and eastern India. Active trades were seen throughout the day.
  
  
• Billet prices up w-o-w: Billet prices in Raipur rose by INR 550/t ($7/t) w-o-w to INR 39,000/t ($459/t) exw today. Furthermore, d-o-d, prices fell by INR 50/t ($0.5/t). This rise in prices over the week was bolstered by an upward trend in market dynamics, influenced by increased spot offerings from neighbouring regions.
  
  

Outlook

According to BigMint, the market remains in a wait-and-watch mode, with clearer direction expected in the coming days.