Indian Pellet Industry Observes Improved Trading Activities

The Indian Iron Ore Pellet (Pellet) industry, particularly in the central region, has recently experienced improved trading activities. The approaching monsoon season has prompted Steel mills to secure an adequate raw materials supply to sustain their operations. Typically, there is supply shortage during the monsoon due to operational disruptions, logistics concerns and low productivity, as assessed by to OfBusiness.

Also, the Steel price surge has influenced mills to book raw materials. Sponge Iron and Billet prices rose by Rs 500-1,500/ton across regions in June 2023 against a significant drop in May 2023.

Expectations And Market Factors

Initially, Steel mills assumed that raw materials such as Iron Ore and Pellets prices would decrease significantly. However, several positive factors, including the rise in Chinese futures and monsoon arrival news, have spurred the Pellet industry. As a result, Steel mills have been motivated to maintain sufficient raw materials stocks in anticipation of price recovery.

Market Sentiments

Central region’s Pellet manufacturers have reported a surge in orders and are aiming to keep prices high for the time being. They have observed a strong demand for their products, particularly with the condition of fast dispatches. Suppliers based in eastern India have also experienced similar sentiments as well.

Current Offers

• Fe 63% Pellets- Rs 9,000-9,200/ton ex-works, Raipur.
• High Phosphorous Pellets- Rs 8,800-8,900/ton ex-works, Raipur.

Other Locations (Fe 63%)

• Rs 8,400-8,500/ton- ex-Durgapur
• Rs 8,500/ton ex-Jharsuguda
• Rs 9,800-10,000/ton ex-Bellary (In South India)
• Note- The prices have remained relatively stable, with minor fluctuations of Rs 100-200/ton on a week-on-week basis.

Market Outlook

Considering the subdued global Steel demand and the significance of Pellet exports on domestic price movement, it is unlikely that there will be a major improvement in the domestic Pellet industry. Limited export demand has played a crucial role in this scenario.

OFB’s Insight

The Indian Pellet industry has seen an improvement in trading activities due to the upcoming monsoon season. Steel mills are proactively restocking their raw material supplies in anticipation of strengthening prices.

However, the weak global market conditions, coupled with the Pellet exports decline, may hinder significant price improvements in the domestic Pellet industry. Notably, India’s Pellet exports witnessed a sharp decline of 31% month-on-month in May 2023 due to weak Chinese demand. Exports to China reported a significant fall of over 50% during May 2023 compared to April 2023.

Read more: Indian Domestic Steel Market Performance During June Week 1

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