India: PELLEX remains stable amid lack of deals

• Buying remains muted amid drop in sponge iron prices
  
  
• Major Raipur-based producer cuts pellet prices
  
  

BigMint's bi-weekly domestic pellet (Fe63%) index remained largely stable at INR 10,650/t ($128/t) DAP Raipur on 11 June, 2024 compared to the last assessment on 7 June. No active deals were recorded in Raipur due to weak market sentiments. Buyers remained cautious about purchasing pellets amid decent inventory levels.

Pellet-buying interest in Raipur didn't improve post-parliamentary election results as buyers waited for offers to drop further. Sponge iron and billet prices have dropped over the last one week. This led buyers to approach nearby markets.

P-DRI prices fell by INR 1,250/t ($15/t) w-o-w to INR 27,250/t ($326/t) exw on 11 June. Meanwhile, prices dropped by INR 250/t ($3) d-o-d. Despite this decline, buying activity surged as buyers, who had been waiting for favourable prices for a long time, took advantage of the current market conditions.

Raipur pellet offers remained stable at INR 11,400-11,500/t ($137-138/t) exw. While one of the major pellet plants reduced offers by INR 300/t ($8/t) to INR 10,800/t ($129/t) exw-Raipur today. However, no deals were reported so far.

Raipur-based pellet makers are showing interest to sell material outside the state at around INR 10,100-10,300/t (Fe 62.5%) but no deals were witnessed in this publishing window. The domestic pellet market is facing bearish sentiments for the last few weeks.

A market participant said: "After the election results, there has been a continuous decrease in sponge and finished steel prices, which has led to a decrease in buying confidence. Steelmakers have shown little interest in major purchases over the past week. However, the decrease in pellet prices may help to increase market confidence".

Steel market updates

• Billet prices down w-o-w: Billet prices in Raipur fell by INR 1,300/t ($16/t) w-o-w to INR 43,700/t ($523/t) exw today, while prices decreased by INR 300/t ($4/t) on a d-o-d basis. The index declined further today due to negative sentiments affecting spot prices in finished and semi-finished steel segments. However, buying activity improved slightly in both segments due to lower offers, leading to a modest increase in trade volumes day-over-day.
  
  

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology Click here.
  
  
• No deal was reported so far in this publishing window and was not considered for price calculation and accorded a 0% weightage for T1 trade.
  
  
• Twenty-one (19) firm offers, bids, and indicative prices were heard. Thirteen (13) were taken for price calculation and given the balance 100% weightage.
  
  

Outlook

Market participants may gain more clarity on pellet prices in the near term following the pick up in trading activities. However, bearish market sentiments following a drop in sponge iron and finished steel prices may impact pellet prices and trading activity in Raipur.