India: PELLEX remains stable even amid bid-offer disparity

• Pellet offers stable this week despite lack of trade
  
  
• Buyers adopt wait-and-watch attitude amid market uncertainty
  
  

The pellet market in Raipur remains largely stable as trading activity continues to be sluggish due to cautious buying interest from steelmakers. Sellers are maintaining their offers at previous levels, but limited movement has been observed in the market. Odisha pellets material remains unviable for Raipur-based steelmakers, adding to the subdued sentiment.

BigMint's bi-weekly domestic pellet (Fe63%) index remained stable at INR 9,350/t ($110/t) DAP Raipur on 24 December compared to the previous assessment on 20 December. Only a 2,000 t pellet (Fe63%) deal was concluded in this publishing window.

A market participant commented: "A noticeable bid-offer disparity has emerged, with buyers targeting prices around INR 9,000/t DAP Raipur, which has hindered active transactions. The price gap between buyers and sellers is a significant issue. Buyers are hesitant to commit at higher rates due to market uncertainty."

Raipur-based pellet makers kept their offers for pellet Fe 63% (+/_0.5%) stable at INR 9,200-9,300/t ($109-110/t) exw. Another pellet producer offered at INR 9,400/t ($111/t) exw.

The sponge iron and billet markets are currently facing difficulties. Weak demand and limited transactions have led to a liquidity crunch, which is putting additional pressure on steelmakers. These liquidity issues are causing buyers to delay significant purchases, negatively affecting market sentiment for pellet trades.

Market participants indicate that the market will likely remain subdued in the coming weeks unless there is an increase in demand or price corrections. Sellers are hoping for improved sentiment in the new year, while buyers are staying cautious due to ongoing uncertainty in the market.

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 not taken for calculations. Thus, the T1 trade category was accorded 0% weightage and not considered for price calculation.
  
  
• Fourteen (14) firm offers, bids, and indicative prices were heard. Ten (10) were taken for price calculation and given the balance 100% weightage.
  
  

Factors driving PELLEX

• Sponge iron prices fall w-o-w: P-DRI prices decreased by INR 200/t ($2.5/t) w-o-w to INR 24,650/t ($289/t) exw-Raipur on 24 December. Meanwhile, prices dropped by INR 150/t ($1/t) d-o-d today. Purchase activity stayed low as buyers were complacent about previous bookings and a stable market trend, anticipating future declines.
  
  
• Billet prices stable w-o-w: Billet prices in Raipur remained stable w-o-w at INR 39,000/t ($458/t) exw today. Furthermore, d-o-d, prices fell by INR 300/t ($4/t). Deals remained muted amid dropping prices in today's trading session.
  
  

Outlook

According to BigMint, the sponge iron producers are in a wait-and-watch mode with expectations of price clarity in the coming days. Transaction volumes may remain low in the coming days as steelmakers typically avoid bulk deals during the last week of the year.