India: PELLEX remains stable in recent trades

• NMDC drop iron ore prices by up to INR 250/t
  
  
• Drop in pellet prices expected in near term
  
  

BigMint's bi-weekly domestic pellet (Fe 63%) index remained stable at INR 9,200/t DAP ($109/t) Raipur on 22 March 2024 compared to the last assessment on 19 March. Around 11,000 t pellet deals of Fe 63/63.5% were recorded at INR 9,350-9,650/t DAP Raipur in this publishing window. Few buyers inquired for material but their bids remained at INR 200-300/t ($2.4-3/t) lowered against the offers.

The pellet offers in Raipur remained unchanged despite the iron ore prices dropped by NMDC. The buyers remained sidelined and waiting for prices revision from the local plants.

Godawari Power and Ispat Ltd (GPIL) kept pellet offers stable at INR 9,400-9,500/t ($113-114/t) exw-Raipur. Other major pellet makers' offers from Raipur also remained stable at INR 9,100-9,200/t ($109-110/t) exw.

A market participant commented: "Buyers in Raipur just booked small quantity inventory while pellet makers also facing pressure from buyers as there was a INR 200-300/t ($2.4-3/t) gap between the bids and offers. The leading miner NMDC dropped its offers in iron ore by INR 250/t recently and few major buyers expecting a price cut in the Raipur pellet offers."

NMDC Chhattisgarh decreased prices of iron ore fines and calibrated lump ore yesterday by INR 200- 250/t ($2.5-3/t) effective from 21 March, BigMint learnt from credible sources. The miner has fixed prices of DR CLO (10-40mm, Fe67%) at INR 6,970/t ($83/t) and of iron ore fines (-10mm, Fe64%) at INR 5,060/t ($62/t) (on FoR basis from its Bacheli complex). Prices include royalty, DMF and NMET charges.

A buyer said, "We are waiting for the prices drop from the Raipur pellet manufacturers and post-Holi festival the pellet offer may witness a drop in the Raipur region. Few neighbouring regions' pellet makers are offering at discount prices in Raipur to attract buyers. However, we relied on the local material and will book the basic quantity after the festival."

Another buyer from Raipur said: "We have enough material in the inventory till this financial year end and will not book material at the current higher offers. The market will also be clearer after one-two weeks. Recently iron ore offers dropped by NMDC and OMC both which is indicating that the prices will be under pressure for raw pellet in the near term."

Market highlights

• Sponge P-DRI up w-o-w: BigMint's P-DRI (FeM 80%) prices increased by INR 300/t w-o-w to INR 26,550/t exw on 22 March. Meanwhile, the assessment for sponge iron in Raipur inched down by INR 50/t d-o-d today. This upward movement in prices reflects supportive buying, as buyers have been active in booking material in response to rising offers.
  
  
• Billet prices rise w-o-w: Billet prices in Raipur rose by INR 300/t w-o-w to INR 39,700/t exw on 22 March. However, prices edged down by INR 100/t d-o-d. The mild trading activity helped to partially support the increase in offerings that drove the index higher. In addition, the approaching Holi holidays made many purchasers reluctant to purchase material, which might delay delivery.
  
  

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology Click here.
  
  
• One (1) deal was reported so far in this publishing window but not taken into account for price calculation and accorded 0% weightage for T1 trade.
  
  
• Seventeen (17) firm offers, bids, and indicative prices were heard. Sixteen (16) were taken for price calculation and given the balance 100% weightage.
  
  

Outlook

Pellet prices in the Raipur market are expected to remain under pressure in the coming days following drop in bids in OMC auction along with price cut by NMDC.