India: PELLEX remains unchanged in recent trades amid stable downstream sentiments

• Sponge iron prices under pressure over last couple of days
  
  
• Raipur sellers keep offers unchanged amid low buying interest
  
  

Pellet prices in the Raipur region remained firm in the mid-week session, supported by stable sponge iron and billet prices over the past week. Market participants noted that while sentiment in the downstream steel segment has shown slight fluctuations, pellet offers have largely been maintained at previous levels.

Trades and price movements

PELLEX, BigMint's bi-weekly domestic pellet (Fe 63%) index for Raipur, remained stable at INR 10,550/t ($117/t) DAP on 13 February compared to the previous assessment on 10 February. Around 15,000 t of pellet (Fe 62.5-63%) deals were concluded in the market at INR 10,400-10,500/t ($115-116/t) exw Raipur.

Raipur-based pellet producers kept stable offers for Fe 62.5-63% (+/-0.5) grade pellets at INR 10,400-10,500/t ($115-116/t) exw. Odisha pellet offers are still not viable for the Raipur buyers amid competitive local prices.

Market dynamics

Trading activity was reported to be moderate, as most major buyers have already secured sufficient raw material inventory. A buyer said, "We are not in a hurry to procure at the moment since inventories are comfortable." He added that buyers are closely monitoring downstream finished steel trends and are expecting some price correction before making fresh commitments.

Adding to the cautious sentiment, a few steelmakers opted to purchase iron ore lumps instead of pellets this week, limiting spot pellet demand. Another steelmaker said, "Lump purchases have temporarily reduced our pellet requirement, indicating a short-term shift in raw material preference."

On the supply side, pellet sellers acknowledged that inquiries have slightly declined over the past two days, coinciding with a marginal softening in sponge iron prices. A pellet producer commented, "Inquiries have slowed a bit as sponge iron prices corrected slightly, but we are holding our offers steady." Sellers remain optimistic that trades will materialize at current price levels, citing stable production costs and firm raw material trends.

Market participants expect greater clarity in the coming week, as the Odisha Mining Corporation (OMC) auction is scheduled. The auction outcome is likely to provide direction to iron ore prices, which in turn could influence pellet pricing dynamics.

At NMDC Chhattisgarh's iron ore auctions on 12 February 118,300 t of iron ore were sold. From Bacheli mines, 43,000-t DRCLO (10-40 mm, Fe 67%) booked at a 17% premium (base price INR 5,290/t), 35,200-t ROM (10-150 mm, Fe 65.5%) at INR 4,640/t, while 78,100-t fines (-10 mm, Fe 60%) remained unsold. From Kirandul mines, 40,100-t (Fe 64%) fines booked at 0.5% premium (base price INR 4,030/t). Prices are on FOR/FOT basis, excluding royalty, DMF, and NMEDT.

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
  
  
• Two (2) deals were recorded in this publishing window, and one was an outlier, so this category was taken for calculation. Thus, the T1 trade category was accorded 50% weightage.
  
  
• Nine (9) firm offers, bids, and indicative prices were heard. Five (5) were taken for price calculation and given balance 50% weightage.
  
  

Key market drivers

• Sponge iron prices rise w-o-w: Sponge iron prices surged by INR 700/t ($8/t) w-o-w on 6 February to INR 27,450/t ($303/t) exw-Raipur. Prices in Raipur inched down by INR 50/t d-o-d. The soft demand environment continued to weigh on sponge iron procurement, keeping overall trading activity muted. Sellers attempted to stimulate buying interest by lowering their offers, however, prevailing bearish sentiment and expectations of further price corrections discouraged buyers from committing to large bookings.
  
  
• Billet prices up w-o-w: BigMint's billet index increased by INR 500/t ($5.5/t) w-o-w to INR 41,650/t ($460/t) exw-Raipur. Meanwhile, prices also rose by INR 100/t d-o-d today. Market sentiment turned moderately positive, particularly in the second half of the trading session, as a pickup in enquiries provided support to spot prices. Buyers, anticipating potential firmness amid relatively elevated raw material costs, showed greater willingness to conclude bookings at marginally higher levels. The improvement in activity helped arrest the recent downtrend in billets, though overall confidence remained cautious.
  
  

Outlook

The Raipur pellet market remains stable but cautious, with participants awaiting clearer signals from both downstream and upcoming raw material developments. "Once the OMC auction results are out, the raw material outlook will be clearer, and that will guide pellet price movement," a trader commented.