India: PELLEX rises by INR 200/t ($2.5/t) on recent price hike by local plants

• Major pellet buyers remain cautious about purchase
  
  
• Sponge PDRI stable, billet up by INR 900/t w-o-w
  
  

Pellet prices in Raipur increased following the aggressive deals in the last week at lower prices by the local pellet producers. The major pellet buyers remained cautious about purchasing material at the revised prices in the last couple of days. However, few buyers inquired about the material at previous offers but deals couldn't conclude successfully.

BigMint's bi-weekly domestic pellet (Fe63%) index increased by INR 200/t ($2.5/t) to INR 9,100/t ($111/t) DAP Raipur on 30 July, 2024 compared to the last assessment on 26 July. No deals in this publishing window as major buyers already purchased aggressively in the last week at reduced prices.

A sponge producer said, "We have purchased enough inventory till mid-August so didn't purchase premium material in last two to three days. The sponge iron prices remained range-bound in the last one week while billet prices showed some improvement but demand remained less at higher offers".

Meanwhile, major producers from Odisha kept their offers stable at INR 8,500-8,800/t DAP Raipur for Fe62.5% pellets. Limited active deals were recorded from the Odisha region for Raipur in the last few days as local steelmakers booked from Raipur plants last week at reduced prices.

A market participant said that Raipur buyers have sufficient inventory and not in a hurry about the next purchasing. Major steel producers bought in the last week and currently they are on wait-and-watch mode.

Rationale:

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology Click here.
  
  
• No deal has been reported so far in this publishing window and were not considered for price calculation and accorded a 0% weightage for T1 trade.
  
  
• Nineteen (19) firm offers, bids, and indicative prices were heard. Fourteen (14) were taken for price calculation and given the balance 100% weightage.
  
  

Factors driving PELLEX

• Raipur pellet offers rise: Raipur-based pellet producers have increased their offers for Fe 63% (+/-0.5) pellets by around INR 200/t ($2/t) to INR 9,100/t ($109/t) exw-Raipur, effective from 29 July. Active bookings at lower rates have prompted pellet producers to raise their offers. Moreover, NMDC's iron ore rake movements have been disrupted due to heavy rains in the region.
  
  
• Sponge iron prices up INR 100/t d-o-d: P-DRI prices rose by INR 100/t d-o-d to INR 25,350/t ($303/t) exw-Raipur on 30 July. However, w-o-w, prices remained largely stable. According to sources, spot purchase enquiries were relatively limited throughout the day due to higher offers, resulting in lower to moderate spot trade volumes.
  
  
• Billet prices up today: Billet prices in Raipur significantly increased by INR 650/t ($8/t) d-o-d to INR 39,750/t ($469/t) exw today, while prices rose by INR 900/t ($11/t) w-o-w. Meanwhile, deals remained sluggish at increased offers.
  
  

Outlook

According to BigMint's analysis, pellet prices in Raipur are anticipated to remain stable in the coming days, as sellers have sold sufficiently for the next few days and buyers also sitting at the comfortable inventory level.

As per sources, The Chhattisgarh State Electricity Regulatory Commission (CSERC) announced last month an average 8.35% tariff hike for all consumer categories, effective from 1 June. Consequently, steel plants will now have to pay Rs 7.60 per unit instead of the previous Rs 6.10 per unit. In that protest significant number of rolling mills in Chhattisgarh have ceased operations for indefinite period.