India: PELLEX rises by INR 400/t ($5/t) following offer hike after OMC auction

• Raipur pellet offers increase by INR 300-400/t ($4-5/t) today
  
  
• Sponge P-DRI, billet prices significantly rise w-o-w
  
  
• Buying interest improves following increase in market liquidity
  
  

BigMint's bi-weekly domestic pellet (Fe 63%) index, PELLEX, rose by INR 400/t ($5/t), reaching INR 9,000/t ($107/t) DAP Raipur as of 24 September 2024. Raipur-based sellers successfully sold 30,000-35,000 tonnes (t) of pellets (Fe 63%) at INR 8,900-9,000/t ($106-107/t) ex-works today, following the price hike. In other transactions, Raipur steelmakers purchased approximately 30,000 t of pellets (Fe 62.5-63%) from Odisha at INR 8,500-8,900/t ($102-105/t) DAP Raipur over the past few days.

Pellet prices across the PAN India region also increased by INR 100-500/t ($1-6/t) this week, except in the West Coast region, due to the rise in merchant sellers' offers following the Odisha Mining Corporation's (OMC's) iron ore auction. OMC conducted an auction for 2.4 million tonnes (mnt) of iron ore on 20 September, with the entire quantity being sold at a premium. Approximately 1.377 mnt of fines (Fe 54-65%) and 1.021 mnt of lumps (Fe 58-64%) were booked at prices ranging from INR 2,370-4,970/t and INR 3,900-6,800/t, respectively. Bids (weighted average) for fines and lumps increased by approximately INR 275/t and INR 50/t compared to the last month.

A steelmaker said that the recent increase in finished steel prices has driven up demand for pellets. Sponge P-DRI prices have risen by approximately INR 1,200-1,500/t ($15-18/t) w-o-w, boosting interest in pellet purchases. The market's liquidity has also improved due to favourable conditions over the past few days. With some buyers yet to make purchases, trade activity is expected to remain high in the Raipur region in the coming days.

Rationale

• PELLEX has been derived using data points, i.e., trades, offers, and bids. To download the detailed methodology, click here.
  
  
• Five (5) deals were reported in the publishing window, and all were considered for price calculation. These were accorded a 50% weightage as T1 trades.
  
  
• Eighteen (18) firm offers, bids, and indicative prices were heard. Fifteen (15) were taken for price calculation as T2 inputs and given the balance 50% weightage.
  
  

Factors influencing PELLEX

• Pellet offers rise today: Raipur-based pellet makers have raised their offers for Fe 63%(+/_0.5%) by INR 300-400/t ($4-5/t) to INR 8,900-9,000/t ($106-107/t) exw-Raipur today. The recent increase in Odisha's pellet prices following OMC's auction and improved market sentiment in the sponge and finished steel segments have bolstered pellet prices in the Raipur region.
  
  
• Sponge iron prices rise w-o-w: P-DRI prices increased by INR 1,500/t ($18/t) w-o-w to INR 26,500/t ($371/t) exw-Raipur on 24 September. Meanwhile, P-DRI prices rose by INR 300/t ($4/t) d-o-d today. Sponge iron prices in India rose by INR 100-550/tonne (t) ($1-7/t) across various markets. The price increase is primarily due to limited material availability, leading to a supply-demand imbalance and boosting market sentiment.
  
  
• Billet prices up w-o-w: Billet prices in Raipur rose by INR 2,100/t (25/t) w-o-w to INR 39,500/t ($472/t) exw. Meanwhile, on a d-o-d basis, billet prices surged by INR 400/t ($5/t). Decent trade activity was witnessed in the market at higher prices from the steelmakers.
  
  

 

Outlook