India: PELLEX remian stable with pockets of trades in mid-week

• Need based procurement by steelmakers
  
  
• Market waits for OMC iron ore auction
  
  

PELLEX, BigMint's bi-weekly domestic pellet (Fe 63%) index for Raipur, remained stable at INR 9,600/t ($101/t) DAP on 12 June against 9 June.

Pellet prices in the Raipur region remained largely stable this week, with limited trading activity reported in the market. A few transactions were concluded by local pellet producers; however, overall buying interest remained subdued as several consumers had already secured their immediate raw material requirements in previous weeks.

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
  
  
• Three (3) deals were recorded in this publishing window, and two (2) were taken for calculation. Thus, the T1 trade category was accorded 50% weightage.
  
  
• Seventeen (17) firm offers, bids, and indicative prices were heard, and twelve (12) were taken for price calculation and given the balance 50% weightage.
  
  

Price movements and offers

Pellet manufacturers in Raipur kept stable offers for Fe 62.5/63% (+/-0.5%) grade pellets at INR 9,400-9,500/t ($98-99/t) exw with slowed sales in the last two three days.

Around 14,000 t of pellet deals were concluded in Raipur at INR 9,400-9,500/t exw by local pellet producers.

Market scenario

Market participants indicated that pellet producers continued to maintain their offer levels despite the slowdown in inquiries. Buyers, on the other hand, remained cautious due to persistent weakness in downstream steel markets.

A Raipur-based steelmaker stated that current pellet prices are not economically viable for aggressive procurement. "Sponge iron and billet prices have been under pressure for the last few weeks, reducing margin in finished steel. As a result, most plants are purchasing pellets only to meet operational requirements rather than building inventories."

Sellers are keeping the iron ore pellet offers at similar level with trading activity slowed down in last couple of days.

Another market participant noted, "Bulk buying activity is largely absent in the market. Most consumers are following a need-based procurement strategy. There is no urgency to stock material as demand from the finished steel segment remains moderate."

Market sources further highlighted that several buyers are closely monitoring the upcoming June iron ore auction by Odisha Mining Corporation (OMC). Expectations of fresh iron ore lump availability from the auction have encouraged some consumers to delay procurement decisions.

Another market player added that many buyers are waiting for the OMC auction results before making large-scale purchases. Depending on the auction outcome and raw material availability, pellet demand may remain under pressure in the near term.

No major deals witnessed from Odisha in Raipur market amid the weak market liquidity and wait and watch mode opted by the buyers.

Key market drivers

• Sponge iron prices fall w-o-w: Sponge PDRI prices dropped by INR 250/t ($2.5/t) w-o-w to INR 24,150/t ($255/t) exw Raipur on 12 June. Though sponge iron prices in the Raipur inched up by INR 50/t during the day as market participation weakened considerably as most buyers had already secured sufficient material during the previous few sessions when procurement activity was relatively stronger. As a result, fresh bookings were primarily need-based, with buyers showing limited interest beyond immediate requirements.
  
  
• Billet prices drop w-o-w: BigMint's billet index in Raipur fell by INR 50/t ($0.5/t) w-o-w to INR 38,750/t ($405/t) exw on 12 June. Also, the index inched down INR 50/t d-o-d. The billet market witnessed a marginal correction during the session, driven by weak demand across both semi-finished and finished steel segments. Market participants remained cautious amid uncertain demand conditions, while sellers largely maintained firm offer levels. The mismatch between elevated spot offers and buyer expectations restricted fresh bookings and kept overall trading activity muted.
  
  

Outlook

As per BigMint's analysis, pellet prices to witness some correction in the coming week if weak steel fundamentals persist. The combination of sluggish sponge iron and billet prices, cautious buying sentiment, and anticipation surrounding the OMC auction is likely to keep the pellet market under pressure in the short term.