India: PELLEX remains stable in recent trades

• Pellet offers remain unchanged in Raipur
  
  
• Sponge iron, billet prices improve
  
  
• Moderate buying activity by steelmakers
  
  

BigMint's bi-weekly domestic pellet (Fe63%) index remained stable at INR 8,950/t ($107/t) DAP Raipur as of 23 August, 2024, compared to 20 August. Around 30,000 t of pellets (Fe63%) were sold by Raipur pellet producers at INR 9,250/t DAP Raipur. Additionally, Raipur buyers booked around 10,000 t of pellets (Fe62.5%) from Odisha couple of days back.

Pellet prices in the Raipur region remained stable following the Odisha Mining Corporation (OMC) auction, with some recent deals concluded by local sellers. Buyers purchased quantities based on their needs at the previous offers from local producers. A few buyers are still holding off, anticipating potential price cuts in the near future.

A steelmaker from Raipur said, "The Raipur-based pellet producers kept their offers stable in the last couple of days. Competitive prices from the Odisha region are lower, but buyers are waiting for a price correction from local sellers. However, a few sponge makers have recently purchased quantities based on their needs." No major deals have been recorded from neighbouring regions during this publishing window.

Some sources indicated that they were expecting a price cut in the Raipur region, as iron ore bids in the OMC auction dropped by INR 500/t in August compared to the previous month. This decline has put pressure on Odisha pellet prices, leading to a reduction of INR 100-300/t following the auction bids.

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. Both deals have been considered for price calculation and accorded a 50% weightage for T1 trade.
  
  
• Seventeen (17) firm offers, bids, and indicative prices were heard. Fifteen (15) 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 up w-o-w: P-DRI prices increased by INR 350/t ($4/t) w-o-w to INR 25,750/t ($295/t) exw Raipur on 23 August. However, prices fell by INR 250/t ($3/t) d-o-d today. Market remained silent as buyers were cautious about buying in the downtrend market.
  
  
• Billet prices rise w-o-w: Billet prices in Raipur increased by INR 200/t ($2.5/t) w-o-w to INR 38,150/t ($456/t) exw. On d-o-d basis, billet prices fell by INR 250/t ($3/t) d-o-d. Weak buying interest continued to weigh on the billet index, extending the ongoing downtrend. The market faced further corrections in anticipation of an improved buying activity. However, buyers remained less active despite the availability of lower offers d-o-d. This lack of interest from buyers contributed to the persistent downward pressure on market offerings.
  
  

Outlook

According to BigMint's analysis, pellet prices in Raipur are likely to remain volatile in the near term due to pressure on pellet prices in the Central Eastern region.