India: PELLEX rises by INR 150/t ($2/t) ahead of Union Budget

• Pellet offers up amid rising sponge, semis tags
  
  
• Trades slow down as market awaits price clarity
  
  

Raipur's pellet prices climbed up in the last few days, with sellers raising their offers ahead of the Union Budget scheduled for tomorrow. This price hike aligns with rising sponge iron and semi-finished steel prices and follows optimism in the market.

BigMint's bi-weekly domestic pellet (Fe63%) index increased by INR 150/tonne (t) ($2/t) to INR 9,900/t ($115/t) DAP Raipur on 31 January 2025 compared to the previous assessment on 28 January. Deals for around 25,000 t of raw pellets were recorded at INR 9,650-9,950/t DAP Raipur over the past couple of days at the previous offers.

Pellet makers in Raipur raised offers for Fe63% (+/_0.5%) to INR 9,800-9,900/t ($113-115/t) exw. Odisha-based plants offered pellets in Raipur at INR 9,550-9,800/t ($110-115/t) DAP, but deals were absent amid a lack of inquiries.

Sponge iron plants secured moderate volumes at the previous offers to fulfil pressing needs and keep operations running. However, fresh trades are yet to be concluded at the revised higher offers. A few pellet producers have temporarily withdrawn from the market, holding back sales in expectation of further price clarity.

A steelmaker commented, "The market has turned cautious ahead of the Budget. Buyers are waiting for clearer signals before making aggressive purchases. We booked some volumes earlier, but now, with the price increase, we are closely monitoring the market before making further deals."

Additionally, recent pellet export deals from Odisha kept domestic prices supported. With the Union Budget around the corner, the market is likely to see more activity, depending on policy directions and demand trends.

A buyer stated, "Inquiries for pellet purchases have been slow in recent days due to rising prices. Major market players expect positive policy announcements in the Budget. Additionally, prices of NMDC iron ore are expected to be announced soon. Market sentiment and trade-level prices should become clearer in the next few days."

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 and only one (1) was taken for calculations. Thus, the T1 trade category was accorded 50% weightage.
  
  
• Nineteen (19) firm offers, bids, and indicative prices were heard. Sixteen (16) were taken for price calculation and given the balance 50% weightage.
  
  

Factors driving PELLEX

• Sponge iron tags up w-o-w: P-DRI prices rose by INR 850/t ($10/t) w-o-w to INR 25,250/t ($292/t) exw-Raipur on 31 January. Meanwhile, prices surged by INR 250/t ($3/t) d-o-d today.
  
  
• Billet prices rise w-o-w: Billet prices in Raipur increased by INR 450/t ($6/t) w-o-w to INR 39,450/t ($456/t) exw today. Furthermore, d-o-d, prices moved up by INR 50/t ($0.5/t). However, trade remained limited today amid cautious buying by steelmakers.
  
  
• Active pellet export deals continue: A domestic pellet maker concluded an export deal for around 50,000 t of pellets (Fe 63%, 2% AL2O3) at $108/t FOB India, sources informed BigMint. Chinese market participants stayed away from seaborne trades due to the Lunar New Year holidays.
  
  

Outlook

According to BigMint's analysis, Raipur's pellet prices are expected to remain volatile, and clarity will emerge next week after the Union Budget announcement. Trade activity will depend on the policy announcements made.