India: PELLEX remains stable following OMC auction, deals muted

• Market remains cautious on softening sponge, billet tags
  
  
• Buyers waiting for price drops before making new deals
  
  

Raipur's pellet prices were stable over the last couple of days, though trades remained subdued due to weak market sentiments. Sponge iron and billet prices declined w-o-w, largely driven by liquidity concerns and limited inquiries from end-users, which forced pellet buyers to exercise caution regarding fresh trades.

BigMint's bi-weekly domestic pellet (Fe63%) index remained stable at INR 9,400/tonne (t) ($109/t) DAP Raipur on 21 January 2025 compared to the previous assessment on 17 January. Raipur-based steelmakers concluded deals for around 13,000 t of pellets (Fe63/63.5%) at INR 9,500-9,600/t ($110-111/t) DAP from local producers. Pellet makers in the region kept offers for Fe63% (+/_0.5%) stable at INR 9,400/t ($109/t) exw.

The results of the iron ore auction from the Odisha Mining Corporation (OMC), in which bids declined by INR 250/t ($3/t) m-o-m, intensified the cautious sentiments in the market. This made sponge iron manufacturers hesitant to commit to fresh purchases of raw pellets.

A Raipur-based steelmaker said, "The current market scenario is challenging. Liquidity issues and muted demand from end-users have significantly impacted trading volumes."

Commenting on the same, a buyer stated, "Market participants are waiting for a price correction before making new deals. We are closely monitoring the situation, as current prices do not meet our expectations."

Overall, muted market sentiments weighed on traded quantities, leaving participants cautious about making any major deals in the near term.

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 have been taken for calculations. Thus, the T1 trade category was accorded 50% weightage.
  
  
• Twenty-one (21) firm offers, bids, and indicative prices were heard. Fifteen (15) were taken for price calculation and given the balance 50% weightage.
  
  

Factors driving PELLEX

• Sponge iron prices down w-o-w: P-DRI prices fell by INR 300/t ($3.5/t) w-o-w to INR 24,100/t ($278/t) exw-Raipur on 21 January. Meanwhile, prices remained unchanged d-o-d today. Trades were absent in the Raipur region, following poor market sentiments amid a downtrend in finished steel tags.
  
  
• Billet prices fall w-o-w: Billet prices in Raipur dropped by INR 400/t ($5/t) w-o-w to INR 38,600/t ($446/t) exw today. Furthermore, d-o-d, prices decreased by INR 150/t ($2/t). Buyers adopted a cautious approach in today's trading session, which led to a drop in transaction volumes.
  
  

Outlook

According to BigMint's analysis, pellet prices are expected to remain volatile, as sellers may revise their offers following market dynamics.