India: PELLEX stable as market awaits OMC iron ore auction results

• Around 30,000-t of deals concluded from Odisha
  
  
• Some pellet makers hold offers in sluggish market
  
  

BigMint's bi-weekly domestic pellet (Fe 63%) index remained stable at INR 10,300/t ($124/t) DAP Raipur on 21 May,2024 compared to the last assessment on 17 May. Raipur sponge and steelmakers booked around 30,000 t of pellets (Fe 62.5+/-0.5%) at around INR 10,000/t DAP Raipur in this publishing window.

Notably, some of the pellet manufactures held back their offers. These are expected to resume post-OMC auction results, sources informed BigMint.

In addition, last pellet offers heard from Godawari for Fe63.5% and Fe66% were at INR 11,200/t ($134/t) and INR 12,700/t ($152/t) exw-Raipur respectively on 17 May. Other pellet producers also kept their offers stable at INR 10,500-10,600/t ($126-127/t) exw.

NMDC sources said the workers' strike issue seen over the last few days is gradually resolving. The mining giant has resumed operations and is dispatching improved volumes of ore to mills. However, it will take couple of days more to make operations fully functional.

A trader said: "Raipur pellet offers are stable and some plants kept their sales closed amid sluggish response from buyers. Market participants are waiting for the results of today's OMC auction for clarity on near-term market dynamics. Not much trading activity was witnessed among the local mills as some sponge makers booked need-based quantities from the Odisha region at prices that were cheaper by INR 500-600/t compared to landed Raipur prices".

A buyer stated: "We are waiting for price clarity that OMC's auction will bring. Mills in Raipur are not buying pellets aggressively as few had already purchased sufficient quantities earlier while others remain in wait-and-watch mode."

Sponge P-DRI prices fall w-o-w: BigMint's PDRI market prices fell by INR 200/t to INR 29,200/t exw on 21 May. However on a weekly basis prices are largely stable. Trading activity increased on lower offers, especially in the central and eastern regions.

Billet prices rise by INR 200/t w-o-w: Billet prices in Raipur increased today by INR 200/t ($2/t) w-o-w to INR 44,550/t ($534/t) exw while inching up by INR 100/t ($1/t) d-o-d. The index increased slightly amid positive market sentiments, especially in north India, which led to an increase in spot offers. This positive shift in market dynamics resulted in a d-o-d increase in buying activity in both 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.
  
  
• One deal was reported so far in this publishing window and taken into account for price calculation and accorded 50% weightage for T1 trade.
  
  
• Ten (10) firm offers, bids, and indicative prices were heard. Nine (9) were taken for price calculation and given the balance 50% weightage.
  
  

Outlook

Pellet prices in Raipur are expected to remain volatile as the market is awaiting OMC's iron ore e-auction results today for better price clarity on iron ore prices.