India: PELLEX remains stable; market awaits OMC auction outcome

• Major producers keep pellet offers on hold
  
  
• Sponge, billet markets witness mixed trends
  
  

Pellet trading slowed in the last couple of days, as major producers kept their sales closed ahead of today's Odisha Mining Corporation (OMC) auction. Market participants adopted a wait-and-watch approach, anticipating possible shifts in prices based on auction outcomes.

BigMint's bi-weekly domestic pellet (Fe63%) index remained stable at INR 10,000/t ($119/t) DAP Raipur on 18 October compared to the previous assessment on 15 October. An Odisha-based producer sold 10,000 t of pellets (Fe62.5%) at INR 9,700-9,800/t DAP Raipur in this publishing window.

The current slowdown is due to expectations of premium bids in the OMC auction, which may push up pellet prices in the near future. The market is closely monitoring the auction's impact on supply and demand. Both sellers and buyers are taking a cautious approach, indicating that the market expects some volatility, particularly if the auction results in higher prices.

A market participant said, "As steelmakers await clarity on the price trend, there is a likelihood of an upward surge in pellet prices in the short term. This is contingent on how aggressively premium bids shape the auction's outcome and overall market sentiment."

Factors driving PELLEX

• Pellet offers stable in Raipur: Raipur-based manufacturers kept their offers mostly on hold. Notably, indicative offers for Fe63% (+/- 0.5%) pellets were at INR 10,000-10,100/t ($119-120/t) exw-Raipur. No major deals were concluded by Raipur-based pellet producers this week amid the lack of clarity in the market regarding tradable prices. Some plants kept their sales closed ahead of OMC's pellet auction.
  
  
• Sponge iron prices fall w-o-w: Sponge P-DRI prices dropped by INR 350/t ($4/t) w-o-w to INR 27,550/t ($328/t) exw-Raipur on 18 October. Meanwhile, prices fell by INR 150/t ($2/t) d-o-d. Demand was modest on Friday, impacted by sluggish movement in the semi-finished and finished steel segments, which led to further reductions in offers.
  
  
• Billet prices stable w-o-w: Billet prices in Raipur remained stable w-o-w at INR 41,000/t ($488/t) exw and decreased by INR 100/t ($1/t) d-o-d. The index experienced a slight decline today due to fluctuating market sentiments and continued weak demand, particularly in the semi-finished steel segment.
  
  

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 in this publishing window and taken into account for price calculation and accorded a 50% weightage for T1 trade.
  
  
• Thirteen (13) firm offers, bids, and indicative prices were heard. Eight (8) were taken for price calculation and given the balance 50% weightage.
  
  

Outlook

Pellet prices in Raipur are expected to remain strong, depending on the OMC auction results. Prices may increase, as Odisha-based miners are expected to raise their offers.