India: PELLEX remains stable despite hike in sponge iron prices

• Pellet offers remain unchanged in Raipur
  
  
• Sponge iron, billet prices improve
  
  
• Market participants waiting for OMC auction results
  
  

BigMint's bi-weekly domestic pellet (Fe63%) index remained stable at INR 8,950/t ($107/t) DAP Raipur as of 20 August, 2024, compared to 16 August. Around 21,000 t of pellets (Fe62.5%) were sold by eastern India-based producers at INR 8,300/t DAP Raipur.

The Raipur pellet market remained moderate in the last couple of days amid holidays. Some buyers booked material to meet immediate needs from the neighbouring regions at competitive prices while others remained cautious and opted for a wait-and-watch stance to get more price clarity.

A steelmaker from Raipur said, "The majority of the buyers were waiting for the response in OMC's auction to gain insights into raw material prices. The workable prices for pellets in Raipur remained low against the prevailing offers which encouraged some buyers to purchase pellets from the nearby regions".

In the recent NMDC Chhattisgarh iron ore auction, around 43,000 t of ROM (10-150mm, Fe 65.5%) was sold at the base price (INR 5,110/t) from the Kirandul mines. Around 12,900 t of iron ore DR-CLO (10-40mm, Fe 67%), 6,000 t of Baila lumps (10-20 mm, Fe 65.5%) and 51,600 t of iron ore fines (Fe 64%) were sold at INR 6,988/t (8% premium), INR 6,260/t (7.5% premium) and INR 4,650/t (base price) respectively from Bacheli. Prices are on FOT basis, including royalty, DMF & NMET.

Rationale:

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology Click here.
  
  
• Two (2) deals have been reported so far in this publishing window and only one (1) deal has been considered for price calculation and accorded a 50% weightage for T1 trade.
  
  
• Twelve (12) firm offers, bids, and indicative prices were heard. Eight (8) 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 9,100/t ($109/t) exw-Raipur.
  
  
• Sponge iron prices up w-o-w: P-DRI prices increased by INR 550/t ($7/t) w-o-w to INR 25,050/t ($299/t) exw Raipur on 20 August. Active buying amid supportive sentiment from finished steel prices have supported the sponge prices in the region.
  
  
• Billet prices rise w-o-w: Billet prices in Raipur increased by INR 400/t ($5/t) w-o-w to INR 39,000/t ($466/t) exw today. Moderate trades were noticed amid rising prices in semi-finished and finished steel segments.
  
  

Outlook

According to BigMint's analysis, pellet prices in Raipur are likely to remain volatile in the near term with some active deals likely to take place. The local pellet plants are expected to revise their offers this week for the next round of orders from steelmakers.