India: PELLEX declines INR 350/t ($3.5/t) as producers in Raipur trim offers, prices may drop further

• Selling pressure leads to a drop in pellet offers
  
  
• Market awaits NMDC iron ore price revision for May
  
  

PELLEX, BigMint's bi-weekly domestic pellet (Fe 63%) index for Raipur, fell by INR 350/t ($3.5/t) to INR 10,050/t ($106/t) DAP on Friday compared to 27 April. BigMint recorded deals for around 70,000 t, concluded at INR 9,800-10,000/t ($103-105/t) exw-Raipur by local pellet producers.

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 recorded in this publishing window, and all were taken for calculation. Thus, the T1 trade category was accorded 50% weightage.
  
  
• Twenty-one (21) firm offers, bids, and indicative prices were heard, and eighteen (18) were taken for price calculation and given the balance 50% weightage.
  
  

Trades and price movements

Pellet prices in the Raipur region declined further reflecting continued weakness in market sentiment. The reduction comes amid lower offer levels from local pellet manufacturers, who revised prices following deals reported around 70,000 t in the market. This marks another step in the ongoing price correction, as producers attempt to stimulate demand by aligning offers with buyer expectations.

Raipur-based producers reduced their offers for 62.5/63% (+/-0.5%) material by INR 300/t ($3/t) to INR 9,900-10,000/t ($104-105/t) exw recently. The downward revision follows persistent weakness in sponge iron and semi-finished steel prices, coupled with sluggish market sentiment and limited buying interest from downstream sectors.

Some Odisha-based producers offered pellet (Fe 62.5-63%) to Raipur-based buyers at INR 9,600-10,200/t ($101-107/t) DAP Raipur, but no deals were recorded in the last couple of days.

Market scenario

Market activity has shown early signs of improvement at these revised levels. Buyers, who had remained cautious in recent weeks anticipating a price correction, have started booking limited quantities to meet immediate requirements.

A buyer said, "Procurement had been delayed earlier due to uncertainty in price trends, but the latest reductions have made transactions more viable."

However, sentiment remains mixed among market participants for the price correction by Raipur pellet producers. Another buyer said, "The current pricing is workable for both sides and could support near-term deal closures, while others continue to adopt a wait-and-watch approach. "

On the supply side, pellet producers have reported a modest increase in inquiries following the price cuts. A pellet manufacturer said, "Overall inquiry levels are still subdued, with limited counter offers from buyers, indicating that confidence has yet to fully recover."

In parallel, a recent increase in commercial cylinder prices by the Indian government may marginally impact steel production costs, particularly for gas-based operations. However, the broader impact on the steel sector is expected to be limited, as nearly 90% of producers rely on coal-based inputs rather than gas.

NMDC CG conducted an auction for 375,600 t of iron ore on 30 April, 47,300 t sold. From Bacheli mines, around 25,800 t (10-40 mm, Fe 67%) DR CLO received INR 1,550/t premium (INR 5,950/t base). 170,300 t (Fe 60%) fines remained unsold.

In the Kirandul mine auction, 21,500 t fines (Fe64%, FOR basis) was sold at base prices (INR 4,540/t), 158,000 t (Fe 64%, FOT basis) fines were unsold. Prices will be on FOR/ FOT basis, exclusive of royalty, DMF, and NMEDT.

A market participant said that NMDC CG may announce their May delivery iron ore prices in the next couple of days, which will give new direction to Raipur pellet prices.

Key market drivers

• Sponge iron prices fall w-o-w: Sponge PDRI prices dropped by INR 150/t ($1.5/t) w-o-w to INR 25,800/t ($272/t) exw Raipur on 28 April. Prices rose by INR 100/t d-o-d today. Buying activity remained moderate today, easing from the stronger momentum seen in the previous session. The slowdown was primarily due to improved procurement yesterday, which prompted sellers to raise prices. However, the price increase, coupled with sufficient buying in the prior session, led to reduced purchasing interest today. As a result, procurement levels softened compared to the notably higher market participation and offtake recorded yesterday.
  
  
• Billet prices firm w-o-w: BigMint's billet index in Raipur increased by INR 50/t ($1/t) w-o-w to INR 42,100/t ($444/t) exw on 1 May. Prices remained largely stable d-o-d today. Market sentiment showed mild improvement, with sellers raising spot offers during the session. However, overall buying participation remained moderate, as most buyers had already secured sufficient volumes in the previous session at favourable price levels.
  
  

Outlook

Pellet prices in Raipur are expected to undergo a downward correction in the near term. Market participants anticipate that improved price clarity and better visibility will emerge over the coming week, potentially leading to a gradual pickup in trading activity. Demand recovery remains cautious; the recent price adjustments could help establish a more balanced market environment in the short term.