India: PELLEX remains stable in recent deals

• Trading remains muted in Raipur market
  
  
• Sponge iron, billets prices down edge d-o-d
  
  

Pellet offers in Raipur remained stable amid moderate transactions concluded by sellers at current offers. Odisha-based producers reduced their offers for buyers in Raipur but deals were not concluded over the last two to three days. Major buyers remained cautious as they have already booked decent quantities of material last week.

BigMint's bi-weekly domestic pellet (Fe63%) index remained stable at INR 9,100/t ($111/t) DAP Raipur on 2 August, 2024 compared to the last assessment on 30 July. A pellet producer from Raipur sold around 20,000 t (Fe63%) at INR 9,200-9,250/t DAP Raipur to local buyers in this publishing window. However, a few sellers are out of the market and are not offering pellets.

A market participant said that pellet buying has remained sluggish due to mixed market sentiments in the sponge and finished steel segments. Buyers are observing current market dynamics and have remained in a wait-and-watch mode. A few plants have sufficient inventory from their previous bookings.

Another market participant said that as NMDC rake movements from Chhattisgarh is slow due to logistical hurdles amid heavy rains, pellets are expected to be a better substitute in the coming days. In July, NMDC dispatched 348 rakes from its Chhattisgarh mines, equivalent to 1.34 million tonnes (mnt) of iron ore. This was a 27% decline compared to 477 rakes (1.84 mnt) recorded in June, as per BigMint data.

The dispatch of rakes, which was previously hampered due to heavy rains, has now improved with approximately 10-12 rakes per day.

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 considered for price calculation and accorded a 50% weightage for T1 trade.
  
  
• Nineteen (19) firm offers, bids, and indicative prices were heard. Sixteen (16) 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 drop INR 50/t d-o-d: P-DRI prices inched down by INR 50/t d-o-d to INR 24,950/t ($298/t) exw Raipur on 2 August. However, w-o-w, prices dropped by INR 300/t ($4/t). According to sources, spot purchase enquiries were relatively limited today.
  
  
• Billet prices down INR 300/t: Billet prices in Raipur decreased by INR 300/t ($4/t) d-o-d to INR 38,800/t ($463/t) exw today, while prices rose by INR 200/t ($2.5/t) w-o-w. Meanwhile, deals remained absent in the Raipur market.
  
  

Outlook

According to BigMint's analysis, pellet prices in Raipur are expected to remain volatile due to price fluctuations in the steel market and logistical hurdles in NMDC's iron ore dispatches.