India: PELLEX remains stable in recent trades

• Around 22,000 t deals concluded
  
  
• DRI, billet prices rise INR 500-700/t w-o-w
  
  

Pellet prices in Raipur have remained mostly stable over the past few days despite the increase in sponge PDRI and semi-finished steel prices. This week saw a price hike of INR 500-700/t for sponge iron and billets, leading to increased trading activity and market liquidity. Steelmakers are showing interest in the revised pellet prices.

BigMint's bi-weekly domestic pellet (Fe63%) index remained stable at INR 8,950/t ($105/t) DAP Raipur on 6 December compared to the previous assessment on 3 December. Around 22,000 t of pellet (Fe63%) deals were concluded by Raipur producers at revised offers of INR 8,700-8,800/t ($103-104/t) exw over the last couple of days.

Raipur-based pellet-makers recently cut their Fe63% (+/_0.5%) pellet offers by INR 300/t ($4/t) to INR 8.700-8,800/t ($103-104/t) exw on 3 December. However, a few plants kept their sales closed at the beginning of this week. However, steelmakers showed buying interest in revised offers and purchased on the basis of immediate needs.

A sponge iron producer said, "While semi-finished prices are showing positive momentum, we are carefully monitoring the market trends over the next few days before making fresh purchases. Pellet prices will become clearer in the near term with trades concluding at revised offers."

In contrast, Odisha-based pellet producers raised their offers and the bid-offer gap rose compared to last week. However, these higher prices are seen as unfeasible for sponge iron manufacturers in Raipur, restraining buying interest for material from neighbouring regions.

A trader informed, "Despite some positive movement in the market, steelmakers are holding back larger purchases, awaiting NMDC's iron ore price revision. The market is uncertain about whether sponge iron and steel price hikes are sustainable which forced them to enter a wait-and-watch mode."

Rationales

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
  
  
• One (1) deal has been reported so far in this publishing window. Thus, the T1 trade category was accorded 50% weightage and not considered for price calculation.
  
  
• Fifteen (15) firm offers, bids, and indicative prices were heard. Eight (8) were taken for price calculation and given the balance 50% weightage.
  
  

Factors driving PELLEX

• Sponge iron prices rise w-o-w: P-DRI prices increased by INR 450/t ($5/t) w-o-w to INR 24,900/t ($294/t) exw-Raipur on 6 December. Meanwhile, prices inched down by INR 50/t ($0.5/t) d-o-d today. Deals remained absent today in Raipur as market participants opted for a cautious stance.
  
  
• Billet prices up w-o-w: Billet prices in Raipur increased by INR 700/t ($8/t) w-o-w to INR 38,900/t ($451) exw today. Furthermore, d-o-d, prices fell by INR 200/t ($2.5/t).
  
  

Outlook

According to BigMint, the outlook on pellet prices in Raipur is expected to become clearer next week as trades are yet to be initiated by the major steelmakers. The rise in offers by Odisha-based plants may also support Raipur pellet prices.