India: PELLEX remains stable amid cautious demand, downside pressure persists

• Marginal improvement in sponge iron sentiment caps decline
  
  
• Fuel, logistics costs create market uncertainty among buyers
  
  

PELLEX, BigMint's bi-weekly domestic pellet (Fe 63%) index for Raipur, remained stable at INR 9,900/t ($103/t) DAP on 15 May (Friday) against 12 May. BigMint recorded two deals totalling around 20,000 t, concluded at INR 9,850-9,950/t ($103-104/t) exw-Raipur by local producers. Although buying activity remained limited, the pace of correction slowed amid slightly improved sentiment in neighbouring sponge iron markets.

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
  
  
• Two (2) deal were recorded in this publishing window and was taken for calculation. Thus, the T1 trade category was accorded 50% weightage.
  
  
• Twenty (20) 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

Offers for 62.5-63% (+/-0.5%) grade pellets were heard at INR 9,850-9,950/t DAP Raipur, broadly stable compared to earlier levels. Market participants noted that while some sellers attempted to hold offers after the recent correction, aggressive bookings remained absent.

Sellers maintained offers unchanged after the recent correction, although buying interest continued to remain cautious.

Market scenario

Market participants noted that demand from sponge iron manufacturers remained subdued, with procurement largely restricted to immediate requirements. Buyers continued to maintain a cautious stance amid uncertainty in finished steel demand and semi-finished steel prices.

At the same time, a slight improvement in sponge iron sentiment was observed in select eastern and neighbouring markets such as Durgapur and Ramgarh, where prices edged up marginally amid improved enquiries and relatively tighter spot availability. However, the positive sentiment is yet to reflect meaningfully in the pellet market, which continues to face pressure from weak downstream consumption and competitive regional offers.

A Raipur-based seller said, "Buying interest remains largely need-based, with most buyers avoiding inventory build-up amid continuous price corrections in pellets and weakness across neighbouring markets. Transactions are happening only in small volumes as market participants expect further adjustments in prices."

Another trader commented, "Geopolitical uncertainties, rising fuel prices, and higher logistics costs have created significant indecisiveness among buyers. Most participants are currently following a wait-and-watch approach and avoiding bulk bookings until there is better clarity on market direction."

Overall, the market remained under pressure, although the sharp downward trend seen earlier has eased amid marginally better sentiment in neighbouring sponge iron markets.

Key market drivers

• Sponge iron prices rise w-o-w: Sponge PDRI prices grew by INR 100/t ($1/t) w-o-w to INR 25,700/t ($268/t) exw Raipur on 15 May. This was due to the recent rebound, with prices gaining INR 200/t d-o-d. The prices weresupported by higher seller offers following improved procurement activity in the previous session. However, trading activity remained limited today, as most buyers had already covered immediate requirements yesterday, restricting fresh enquiries in the market.
  
  
• Billet prices weaken by INR 800/t w-o-w: BigMint's billet index in Raipur decreased by INR 800/t ($8/t) w-o-w to INR 40,050/t ($418/t) exw on 15 May. Meanwhile, the index remained steady d-o-d. Market activity remained subdued, with enquiry levels staying weak. Market participants said logistical challenges, particularly limited transport availability, further restricted fresh bookings and capped spot activity.
  
  

Outlook

Raipur pellet prices are likely to remain range-bound to weak in the near term, as sluggish sponge iron demand, cautious buying sentiment, and competitive Odisha offers continue to weigh on the market.