India: PELLEX remains stable in recent deals

• Pellet offers remain stable in Raipur
  
  
• Odisha records active deals
  
  

BigMint's bi-weekly domestic pellet (Fe63%) index remained stable at INR 8,950/tonne ($107/t) DAP Raipur on 27 August, 2024, compared to 23 August. Raipur buyers booked around 39,000 t of pellets (Fe62.5%) from Odisha at INR 8,500-8,700/t DAP Raipur a couple of days back.

Pellet prices in the Raipur region remained stable following a decent deal concluded by Raipur and Odisha-based pellet makers in the last couple of days. However, buyers are still carrying decent inventory for the next couple of weeks. According to sources, CLO (lump) movement was slow owing to monsoon. Offers remained supported in Raipur due to these factors.

One of the pellet makers said "We have enough material for the next couple of weeks. However, we are getting offers from Odisha-based pellet makers reasonably lower than the prevailing offers in Raipur."

Over the past week, there has been active interest from buyers in purchasing pellets based on their needs. The competitive pricing of Odisha's pellets has contributed to steady demand from Raipur. However, pellet makers in Raipur are not rushing to finalise any deals, as they secured a sufficient amount of material the previous week.

A steelmaker from Raipur said, "Raipur's steelmakers are turning to Odisha for raw pellets due to their cost-effectiveness. The price gap between local pellets and those sourced from Odisha is still more attractive to buyers in Raipur."

Rationale:

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology Click here.
  
  
• Three (03) deals have been recorded in this publishing window and only one considered for price collection and accorded 50% weightage for T1 trade.
  
  
• Thirteen (13) firm offers, bids, and indicative prices were heard. Twelve (12) were taken for price calculation and given the balance 50% weightage.
  
  

Factors driving PELLEX-

• Pellet offers unchanged in Raipur: Raipur-based producers have kept their offers stable for Fe 63% (+/-0.5) pellets at INR 9,100/t ($108/t) exw-Raipur.
  
  
• Sponge iron prices remain largely stable w-o-w: P-DRI prices dipped by INR 50/t ($1/t) w-o-w to INR 25,000/t ($298/t) exw Raipur on 27 August. However, prices increased by INR 250/t ($3/t) d-o-d today. Improvement in buying activity has supported the sponge prices in the region.
  
  
• Billet prices drop w-o-w: Billet prices in Raipur decreased by INR 400/t ($5/t) w-o-w to INR 38,600/t ($460/t) exw. On a d-o-d basis, billet prices inched up by INR 150/t ($2/t). Trading activity in the spot market was slow amid slight hike in offers. Subdued buying interest was witnessed and sellers offered discounts depending on payment and delivery terms.
  
  

Outlook

According to BigMint's analysis, pellet prices in Raipur are expected to remain stable in the coming week due to sluggish iron ore supply caused by the monsoon, which gives buyers an advantageous position. Additionally, buyers are awaiting NMDC's iron ore price revision for further clarity on market trends.