India: PELLEX rises by INR 300/t ($4/t) in recent trades

• Raipur producers raise offers
  
  
• Sponge, billet prices up w-o-w
  
  

Pellet prices in Raipur witnessed a hike following revised offers from local pellet producers amid moderate trade activity. The price increase was supported by favourable market sentiments from the sponge iron and semi-finished steel sectors. However, market participants remained cautious about bulk purchases due to falling m-o-m bids in the OMC fines auction and the pending price revision by NMDC.

BigMint's bi-weekly domestic pellet (Fe63%) index increased by INR 300/t ($4/t) to INR 9,350/t ($110/t) DAP Raipur on 20 December compared to the previous assessment on 17 December. Raipur-based sellers concluded around 40,000 t of pellet (Fe63%) deals at INR 9,350-9,450/t ($110-111/t) DAP Raipur at the revised offers.

A trader commented "Steelmakers highlighted the lack of clarity regarding the tradable levels for raw pellets in the market. Currently, pellets from Odisha are not viable for local buyers due to logistics and pricing issues. In response, many sponge iron producers have adopted a wait-and-watch approach, expecting a clearer price direction in the coming week."

Raipur-based pellet makers raised their offers for pellet Fe 63% (+/_0.5%) on 19 December by INR 200/t ($2.5/t) to INR 9,200-9,300/t ($109-110/t) exw. Another pellet producer increased its offers to INR 9,400/t ($111/t) exw.

A market participant, commenting on the current market scenario, said, "On the supply side, pellet sellers have kept their offers on the higher side, anticipating stronger trade activity in the near term. Pellet producers are optimistic about aggressive trading in the coming days, as the steel market's performance is likely to support pellet prices."

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 both were for calculations. Thus, the T1 trade category was accorded 50% weightage and not considered for price calculation.
  
  
• Fourteen (14) firm offers, bids, and indicative prices were heard. Twelve (12) were taken for price calculation and given the balance 50% weightage.
  
  

Factors driving PELLEX

• Sponge iron prices up w-o-w: P-DRI prices increased by INR 550/t ($7/t) w-o-w to INR 24,950/t ($294/t) exw-Raipur on 20 December. Meanwhile, prices dropped by INR 100/t ($1/t) d-o-d today. Sponge iron prices witnessed a steady decline today, dropping by INR 100-300/t across locations amid selling pressure and weakening market sentiments. Due to the market's instability and declining prices of materials, purchasers remained cautious, which resulted in slow buying activity despite this considerable price fall.
  
  
• Billet prices rise w-o-w: Billet prices in Raipur rose by INR 700/t ($9/t) w-o-w to INR 39,350/t ($463/t) exw today. Furthermore, d-o-d, prices fell by INR 250/t ($3/t). Deals remained muted amid dropping prices in today's trading session.
  
  

Outlook

According to BigMint, the market remains in a wait-and-watch mode, with clearer direction expected in the coming days. Trade activity will remain volatile amid liquidity crunch in the market following subdued finished steel prices and sales.