India: PELLEX remains stable amid less transactions

BigMint's bi-weekly domestic pellet (Fe 63%) index remained stable at INR 9,850/t DAP ($119/t) Raipur on 2 February 2024 compared to the last assessment on 30 January 2024. A deal of 11,000 t was recorded at INR 9,850/t DAP in this publishing window. Few bids remained lowered by INR 500/t against the offers.

Pellet prices in Raipur remained stable while inquiries remained subdued as buyers are less interested in booking material at current offers. A few need-based deals were concluded by the sponge makers amid downtrend market sentiments.

A trader said: "The prices may remain under pressure following the approach of buyers as limited deals were concluded at current offers. Most buyers remained sidelined while we heard about some production cuts from the steel plant also which may weigh down pellet demand in the coming days. However, the current dynamic is very unpredictable as iron ore prices are on the higher side while sponge and finished steel are under pressure."

A market participant commented, "We didn't book material at present prices as a few days back sufficient quantity was booked at the time of price reduction by plants. The current scenario is on wait and watch mode situation and buyers also remained cautious about material bookings."

As per sources, the neighbouring market is also under pressure about price cuts while demand remains muted amid poor conversion margin. On the other hand, just need basis deals to operate the plant have happened in the past few days.

The conversion spread from sponge iron (PDRI) to billets for the standalone furnaces in the region was recorded at INR 13,050/t, slightly down w-o-w.

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 this week, and taken into account for price calculation and accorded 50% weightage for T1 trade.
  
  
• Twelve (12) firm offers, bids, and indicative prices were heard. Six (6) were taken for price calculation and given the balance 50% weightage.
  
  

Market highlights

• Raipur pellet offers stable: Godawari Power and Ispat Ltd (GPIL) pellet (Fe 63% +/-0.5) offers remained stable at INR 10,100/t ($122/t) exw-Raipur. The major pellet players' raw pellets offers recorded at INR 9,700-9,800/t ($117-118/t) exw today.
  
  
• P-DRI prices in Raipur fall w-o-w: BigMint's P-DRI (FeM 80%) prices fell by INR 250/t d-o-d to INR 26,200/t exw on 2 February. The assessment for the sponge in Raipur decreased by INR 450/t w-o-w today. However, BigMint pointed out that the market participants continued to exercise caution because the finished steel market did not respond as much. Additionally, prices have decreased due to a large adjustment in steel prices in the northern area.
  
  
• Billet prices in Raipur down w-o-w: Billet prices in Raipur dipped by INR 550/t w-o-w to INR 39,250/t exw on 2 February. Prices fell by INR 200/t d-o-d. The index fell due to gloomy market sentiment in the country's semi-finished segment. Deals were seen at reduced offers due to the market downturn. The finished segment reported a nominal trade volume.
  
  

Outlook

The pellet market is expected to remain volatile in the coming days as buyers wait for price reductions to book material. However, increased iron ore prices are also a matter of concern for pellet producers.