Is Indian Pellet Market Weak Due To Limited Trades?

The Indian Pellet industry is currently facing a challenging situation as limited inquiries are being made with the producers due to the unsupported Sponge Iron market in India. The supply is exceeding the demand in the spot market, resulting in limited purchases of raw materials. In this article, we will discuss the current prices, trades, and market outlook of the Indian Pellet market.

Current Situation

• Limited Purchases- The unsupported Sponge Iron market in India has led to limited purchases of raw materials, resulting in the industry facing a challenging time.

• Weak Response In OMC Auction- In a recent OMC auction, approximately 11.5 lakh tons of Iron Ore was offered, in which the offered quantity of fines was reported to have a weak response. It resulted in about 60% of the allotted quantity for fines remaining unsold. This has pushed Sponge Iron producers to hold bulk procurement of raw materials at prevailing offers.

• Prices- Presently, Fe 63% Pellets are being offered at approximately Rs 9,100-9,200/ton ex-Raipur, Rs 9,300/ton ex-Kharagpur, and about Rs 9,800/ton ex-works in Durgapur. In Raipur, one of the integrated plants has reduced Pellet offers yesterday by Rs 300/ton and offered Fe 63.5% Pellets at Rs 9,500/ton ex-works.

• Discounts Offered- Due to limited response, the Pellet producers are offering marginal discounts if there are inquiries for bulk orders, as per sources reported to Ofbusiness. According to Sponge Iron manufacturers in Raipur, the lifting of materials is remaining slow, and there is sufficient stock with them. Hence, they are postponing procurement for raw materials and booking as per necessity amidst the hope of no price recovery and even further downtrends in prices due to weak participation in Iron Ore auctions in the south and eastern regions.

Market Outlook In India

There is hope among participants for further softening in Iron Ore and Pellet prices due to sufficient availability and limited future orders along with the slow lifting of Sponge Iron. Hence, there are chances that Pellet makers will adjust their offers as per the demand in the market, accordingly the prices to react downtrend, if the demand with Mid-sized Steel mills, including Sponge Iron plants, remained the same (slow).

OFB’s Insight

Several factors, including sufficient availability, limited future orders, and demand with Mid-sized Steel mills, including Sponge Iron plants affects the Pellet market in India. Pellet makers are likely to adjust their offers as per the demand in the market, and the prices may react downtrend if the demand remains slow.

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