India: PELLEX remains stable in recent trade

SteelMint's bi-weekly domestic pellet (Fe 63%) index remained stable at INR 9,850/t DAP Raipur on 30 January 2024 compared to the last assessment on 25 January 2024. A deal of 10,000 t was recorded at INR 9,850/t DAP in this publishing window.

Pellet offers remained supportive in the Raipur region this week but few inquiries were reported.

A trader said: "Buyers were booking to meet immediate requirements last week. A few more deals were heard this week from sponge iron producers. The market is currently slow as no aggressive buying is seen. A few buyers floated bids which were lower by INR 200-300/t as against current offers."

A market participant commented, "Buyers had booked actively last week and hence are not much active in the market. However, after the hike in iron ore prices, pellet production costs have increased which may keep pellet offers supportive in the near term. However, pellet prices have dropped in neighboring regions by INR 100-200/t this week on low demand and weaker finished commodity prices."

The conversion spread from sponge iron (PDRI) to billets for the standalone furnaces in the region was recorded at INR 13,050/t, slightly down w-o-w. However, some market observers expect the spread to increase 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.
  
  
• One (1) deals have been reported so far this week, and was taken into account for price calculation and accorded 50% weightage for T1 trade.
  
  
• Eleven (11) firm offers, bids, and indicative prices were heard. Six (6) were taken for price calculation and given the balance 50% weightage.
  
  

Market highlights

• Raipur pellet offers stable: Godawari Power and Ispat Ltd (GPIL) pellet (Fe 63% +/-0.5) offers remained stable at INR 10,100/t ($122/t) exw-Raipur. The major pellet players' raw pellets offers recorded at INR 9,700-9,800/t ($117-118/t) exw today.
  
  
• P-DRI prices in Raipur rise w-o-w: SteelMint's P-DRI (FeM 80%) prices inched up by INR 150/t d-o-d to INR 26,650/t exw on 30 January. The assessment for the sponge in Raipur increased by INR 300/t w-o-w today. Sponge iron prices in India fell by INR 100-150/t d-o-d in major regions. Today, buying activity in the semi-finished segment improved.
  
  
• Billet prices in Raipur up w-o-w: Billet prices in Raipur inched up by INR 150/t w-o-w to INR 39,700/t exw on 30 January. Prices remained stable d-o-d. Participants in the market are anticipating a rise in semi-finished steel prices, possibly influenced by the increase in raw material prices by NMDC, which also contributed to increased demand for sponge iron throughout the day.
  
  

Outlook

The pellet market is expected to remain supported in the coming days following the increase in raw material prices in some regions.