India: PELLEX remains stable in recent deals; sponge, billet prices on downtrend

• Trade activity remains sluggish in last couple of days
  
  
• Sponge iron, billet prices under pressure this week
  
  
• Pellet export trades regain momentum on global price recovery
  
  

BigMint's bi-weekly domestic pellet (Fe63%) index remained stable at INR 9,550/t ($114/t) DAP Raipur on 5 July, 2024 compared to the last assessment on 2 July. Around 15,000 t raw pellets were booked by a buyer from both local and eastern India plants at INR 9,450-9,650/t in this publishing window. Trade activity remained subdued in the last couple of days amid cautious buying from buyers.

Pellet prices in the Raipur region remained unchanged with no major trading activity from the buyers. The recent fall in the sponge pellet and billet prices have created uncertainty for buyers about pellet purchasing.

Odisha-based pellet producers are offering at INR 8,800-9,200/t (Fe 62.5%) DAP Raipur, largely stable this week.

A steelmaker said, "The trading activity remained sluggish amid fluctuating sponge and billet prices this week. Buyers kept their bids lower against the offers. The drop in the sponge and finished steel prices kept the steelmakers away from the pellet deals as they awaited market stabilisation. Meanwhile, some need basis buying was witnessed by a few steelmakers in the Raipur region."

Pellet export trades have regained momentum on global iron ore price recovery. Deals of around 300,000 t pellet exports were recorded by BigMint in the last one week. A pellet producer said that few pellet producers from Odisha sold their material in exports and some participants were expecting that prices may remain supportive in the near-term. However, the downstream steel commodity is not performing well and this weighed on the pellet trading activity in the central-eastern region in the last couple of days.

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 both were considered for price calculation and accorded 50% weightage for T1 trade.
  
  
• Twenty five (25) firm offers, bids, and indicative prices were heard. Eighteen(18) were taken for price calculation and given the balance 50% weightage.
  
  

Factors driving the PELLEX-

• Raipur pellet offers remain stable w-o-w: Raipur-based pellet makers have kept their offers stable for Fe 63%(+/- 0.5%) at INR 9,500-9,600/t ($115-116/t) exw-Raipur today.
  
  
• Sponge iron prices stable w-o-w: P-DRI prices dropped by INR 350/t ($4/t) d-o-d to INR 25,700/t ($308/t) exw-Raipur on 5 July. On a w-o-w basis, prices remained largely stable. No major sponge pellet deals were witnessed in the Raipur today as participants were waiting for price stabilisation.
  
  
• Billet prices fall by INR 850/t w-o-w: Billet prices in Raipur dropped by INR 850/t ($10/t) w-o-w to INR 39,800/t ($477/t) exw today, while prices decreased by INR 400/t ($5/t) on a d-o-d basis. Minimal movement was observed in the spot market today as buyers remained majorly silent amid a declining price trend. Sellers lowered offer prices to boost sales, but buyers entered wait-and-watch mode and waited for clarity on the market trend.
  
  

Outlook

The market is expected to remain volatile amid downtrend market sentiments in downstream steel prices which is impacting pellet prices and trades in the Raipur region. The trades are yet to be concluded by some buyers as they were in a wait-and-watch mode amid the spotting of market dynamics. A market participant informed BigMint that few buyers have lack of price clarity for pellet buying. The downtrend in steel prices in the last month also weighed on trades.