India: PELLEX rises by INR 200/t (2.5/t) amid hike in pellet, sponge offers

• Pellet offers rise by INR 400/t ($5/t) in Raipur
  
  
• Sponge iron, billet offers sharply up
  
  
• Transactions conclude at old offers
  
  

BigMint's bi-weekly domestic pellet (Fe 63%) index increased by INR 200/t (2.5/t) to INR 9,700/t DAP ($117/t) Raipur on 16 April 2024 compared to the last assessment on 12 April. Deals of around 52,000 t of pellets (Fe 63-63.5%) were concluded at INR 9,550-9,850/t ($115-118/t) DAP Raipur in this publishing window. However, 10,000 t of deals of Fe 66% pellet were also concluded at INR 11,350/t ($135-136/t) DAP Raipur in this publishing window.

The pellet offers in Raipur increased by INR 400/t ($5/t) today amid a sharp uptick in the sponge and finished prices in the PAN India region yesterday. However, no deals were concluded at the increased revised prices as buyers already bought the material at the old offers in the last two or three days.

Godawari Power and Ispat Ltd. (GPIL) has increased pellet offers for Fe 63.5% and Fe 66% (+/-0.5) by INR 400/t ($5/t) to INR 10,100/t ($121/t) and INR 11,600/t ($139/t) exw-Raipur, respectively. Other producers, too, recently raised prices by INR 400/t ($5/t) to INR 9,800/t ($117/t) exw.

A buyer from Raipur said, "In the expectation of price rise, we already booked the material at previous prices as per needs. However, the sponge and finished prices rose sharply yesterday which boosted market confidence." However, sustainability of the current price is a major concern.

A market observer commented that after the current price revision, the landed offers to Raipur from the neighbouring region were around INR 200-500/t ($2.5-6/t) cheaper than local offers.

While the market has seen improvement with the rise in pellet offers, concerns remained about the acceptability of these prices. Despite yesterday's increase in sponge and other finished steel prices, today's prices have declined.

However, due to the recent increase in downstream commodity prices and the drop in Odisha iron ore base prices, the market would get more clarity in the upcoming days.

OMC has scheduled an auction for 3 mnt of iron ore ( 1.828 mnt of fines and 1.177 mnt of lumps) on 19 April, 2024. OMC has reduced the base price m-o-m by INR 200-300/t for fines, while INR 500/t has been increased m-o-m for the few lumps lots.

Relevant market snapshots

• Volatile sponge P-DRI prices : BigMint's P-DRI (FeM 80%) prices increased by INR 1,000/t ($12/t) w-o-w to INR 30,000/t ($359/t) exw on 16 April. On the other hand, prices dropped by INR 600/t ($7/t) d-o-d. The scrap shortage and a price hike in the northern market of finished steel supported Raipur sponge prices. However, due to lower buying interest prices dropped sharply today.
  
  
• Billet prices surge w-o-w: Billet prices in Raipur rose by INR 1,600/t ($19/t) w-o-w to INR 43,300/t ($518/t) exw on 16 April. Prices decreased by INR 400/t ($5/t) d-o-d. The index showed a sharp uptick as participants panicked amid the Iran-Israel conflict in expectation of a price hike and purchased a decent quantity. The power shortage in steel mills and artificial shortage of material also supported the prices.
  
  

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology Click here.
  
  
• Five (5) deal was reported so far in this publishing window and four were taken into account for price calculation and accorded 50% weightage for T1 trade.
  
  
• Twelve (12) firm offers, bids, and indicative prices were heard. Eight (8) were taken for price calculation and given the balance 50% weightage.
  
  

Outlook:

Pellet trades in Raipur are expected to remain slow amidst decent bookings done earlier this week . Also, participants waiting for the OMC iron ore auction. The sustainability of sponge and finished steel prices will also impact pellet offers in the central India region.