India: PELLEX remain stable with weaken market continued

• Buyers continue to prefer lumps over pellets
  
  
• Lack of spot inquiries weighed on trading activity
  
  

PELLEX, BigMint's bi-weekly domestic pellet (Fe 63%) index for Raipur, remained stable at INR 10,050/t ($106/t) DAP on Tuesday compared to 1 May. BigMint recorded deals for around 5,000 t, concluded at INR 9,900/t ($104/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.
  
  
• One (1) deal was recorded in this publishing window, and was taken for calculation. Thus, the T1 trade category was accorded 50% weightage.
  
  
• Twenty-three (23) firm offers, bids, and indicative prices were heard, and twenty (20) were taken for price calculation and given the balance 50% weightage.
  
  

Trades and price movements

Pellet prices in the Raipur region have remained largely stable over the past couple of days, with only limited trading activity observed during the current publishing window. Market participants indicated that while some transactions were concluded, overall volumes remained thin, reflecting a cautious stance among buyers.

Raipur-based producers kept their offers stable for 62.5/63% (+/-0.5%) material at INR 9,900-10,000/t ($104-105/t) exw this week.

Some Odisha-based producers offered pellet (Fe 62.5-63%) to Raipur-based buyers at INR 9,600-10,100/t ($101-106/t) DAP Raipur, but no deals were recorded in the last couple of days.

Market scenario

According to several buyers, most had already secured their procurement requirements during the mid-week period when prices were revised. As a result, fresh buying interest has slowed, leading to subdued activity in the spot market. A buyer added, "We had already booked our volumes earlier at revised rates, so there is no urgency to enter the market again."

Pellet producers provided similar sentiments, highlighting a noticeable drop in inquiries. A pellet manufacturer informed, "The number of fresh inquiries has declined significantly over the last few days. Market sentiment is slightly bearish, mainly due to tight liquidity conditions." Producers also added that while prices have not yet corrected, the underlying demand indicators remain weak.

Buyers indicated that procurement is currently being conducted strictly based on immediate needs. Weak demand for downstream steel is impacting raw material consumption patterns. One buyer explained, "We are only purchasing what we require at the moment. There is no clear indication of strong steel demand, so we are holding off on bulk procurement for now."

Meanwhile, some buyers continue to prefer iron ore lumps, citing more competitive pricing compared to pellets. Additionally, improved margins in sponge CDRI routes have influenced this shift. A sponge iron producer commented, "At current price levels, iron ore lumps are offering better economics. Sponge iron via CDRI is yielding better margins compared to pellet-based PDRI."

Looking ahead, market sources suggest that pellet prices could come under pressure in the near term. With weak sentiment, limited liquidity, and sluggish downstream demand, the likelihood of a price correction this week cannot be ruled out. A market source said, "If the current trend continues, we may see a downward movement in prices in the coming days."

Key market drivers

• Sponge iron prices firm w-o-w: Sponge PDRI prices inched up by INR 100/t ($1/t) w-o-w to INR 25,850/t ($272/t) exw Raipur on 5 May. Prices dropped by INR 50/t d-o-d today. Trade activity was slow, with minimal enquiries and negligible deal finalisations, as uncertainty kept participants on the sidelines. The finished steel segment also reflected similar weakness, with dull demand and no major bulk bookings.
  
  
• Billet prices down w-o-w: BigMint's billet index in Raipur decreased by INR 200/t ($2/t) w-o-w to INR 41,700/t ($438/t) exw on 5 May. Prices fell by INR 300/t ($3/t) d-o-d today. Market activity remained sluggish throughout the session, with muted buying interest and limited enquiries across the semi-finished steel segment. Participants reported weaker sentiment in finished steel markets, with slower offtake discouraging fresh procurement. Buyers largely stayed on the sidelines, awaiting clearer signals on price sustainability before committing to new bookings.
  
  

Outlook

Pellet prices in Raipur may see a downward price correction in the next few days amid the weaker counter from the buyers.