India: PELLEX rises INR 400/t on active trades, hike in offers

• NMDC's DR-CLO auction fetches over 35% premium
  
  
• Sponge iron, billet prices increase sharply w-o-w
  
  

BigMint's bi-weekly domestic pellet (Fe63%) index increased by INR 400/tonne (t) ($5/t) to INR 10,200/t ($121/t) DAP Raipur on 4 October 2024 compared to the previous assessment on 1 October. During this publishing window, Raipur-based pellet producers sold around 60,000 t of pellets (Fe63-63.5%) at INR 9,800-10,500/t ($116-125/t) exw. Additionally, Odisha-based sellers concluded deals of around 20,000 t of pellets (Fe63%) at INR 9,700-9,800/t ($115-117/t) DAP Raipur.

Pellet prices in Raipur increased this week due to higher offers from local producers and in neighbouring regions. Buyers actively purchased pellets, supported by favourable market sentiments in the raw material and downstream steel segments. Prices of sponge pellets rose sharply this week, supporting overall pellet tags.

A market participant mentioned that pellet prices may continue to be volatile due to current market trends, as it is challenging for steelmakers to suddenly accept higher offers. In the near term, trends in sponge iron offers will determine pellet prices in the Raipur region.

Odisha-based producers offered pellets to buyers in Raipur at INR 9,500-10,000/t DAP, with active transactions observed at these levels in the last couple of days.

A steelmaker mentioned that the recent hike in sponge P-DRI prices has increased buyers' confidence in advance purchases. Improved end-user demand for finished steel has kept market liquidity high, and the market expects more deals in the Raipur region in the near future.

At the Bacheli iron ore auction by the National Mineral Development Corporation (NMDC) held on 3 October, around 21,500 t of fines (Fe 64%) received bids at the base price of INR 5,050/t. Meanwhile, around 21,500 t of DR-CLO (10-40 mm, Fe 67%) were booked at INR 9,314/t (at 37% premium) against the base price of INR 6,780/t. Prices are on FOR basis, including royalty, DMF, and NMET.

Factors driving PELLEX

• Pellet offers rise in Raipur: Raipur-based manufacturers recently increased their offers for Fe 63% (+/- 0.5%) pellets by INR 400-500/t ($5-6/t) to INR 10,200-10,300/t ($121-123/t) exw-Raipur. However, one producer held off on sales today and opted for a maintenance shutdown for the coming days.
  
  
• Sponge iron prices surge: P-DRI prices rose INR 2,150/t ($26/t) w-o-w to INR 29,050/t ($346/t) exw-Raipur on 4 October. Meanwhile, prices increased by INR 400/t ($5/t) d-o-d. Despite the price hikes, bookings remained moderate. Buyers were cautious due to the continuous price rise, and only need-based procurement was observed.
  
  
• Billet prices increase: Billet prices in Raipur climbed up by INR 2,300/t ($27/t) w-o-w to INR 41,100/t ($489/t) exw, while they rose INR 50/t ($1/t) d-o-d. The index remained range-bound today, with a slight increase, driven by trends in the neighbouring markets. However, buying activity was slow, and intra-day sentiments remained weak across the semi-finished and finished steel segments.
  
  

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
  
  
• Five (5) deals were reported in this publishing window, and three (3) were taken into account for price calculation and accorded a 50% weightage for T1 trade.
  
  
• Eighteen (18) firm offers, bids, and indicative prices were heard. Thirteen (13) were taken for price calculation and given the balance 50% weightage.
  
  

Outlook

Pellet prices in Raipur are expected to remain firm amid the present market dynamics. Trades may trend upward, given improved market liquidity in the past couple of days.