Despite higher Iron ore fines prices in the domestic market, Pellet makers may be compelled to reduce offers owing to weak demand and rising imports of Iron ore.
Current prices (basic) of Fe 63% Pellet are standing in the range of INR 8,000-8,500/MT in eastern region and around INR 7,800/MT in southern part.
Sponge iron manufacturers mentioned that it is nonviable to manufacture DRI by procuring Pellets at these prices. They also stated that most of the Sponge iron units are under closure because of high cost of production.
“We have 300 MT per day Sponge iron capacity but are operating at only 100 MT per day owing to shortage of Iron ore & coal. We are seeking for imported Iron ore lump, which is offered to us at around USD 105/MT CIF East Coast of India for December delivery, by a trading house,” said a Sponge iron manufacturer based in West Bengal.
Market participants expect NMDC to lower Iron ore prices for December, which will put pressure on the domestic Pellet prices.
Rising Iron Ore Imports
India’s Iron ore imports have touched an all time high in FY15. Total imports are expected to remain in the range of 9-11 MnT during this fiscal.
Imported Iron ore lump offers from South Africa in bulk quantity are assessed at around USD 97-98/MT CIF Krishnapatnam port; loading in December/January. There are few offers for imported Pellets but manufacturers claim it should be around USD 112-115/MT CIF India.
Pellet Manufacturers reduce Production
Pellet manufacturers said that though demand is not picking up at these prices, it is difficult to pull down prices as Iron ore fines prices are quite high. Some of big Pellet makers like Essar Steel, Jindal Steel & Power and Bajrang Power & Ispat have closed sales as of now because of in-house consumption.
Rajasthan based Jindal Saw, which sells Pellet to Gujarat based buyers, is looking into deliveries of its previous orders, which were booked at INR 6,400/MT (ex-plant). The company is yet to open new prices for fresh bookings.
Indian Iron Pellet Prices
Prices in INR/MT
|Barbil||64||Arya Iron & Steel – 8,000*|
|Paradip||63||Essar Steel – 7,700|
|Jajpur||64||Brahmani River Pellets- 7,900|
|Tatanagar||63||Adhunik Metaliks – 7,900|
|Jharsuguda||62||Shyam Metalics & Energy – 7,800|
|62||Bhusan Power- 7,600|
|Raipur||63||Godawari Power & Ispat – 8,600-8,800|
|Durgapur||62||Rashmi Metaliks – 8,000|
|Bellary||63||MSPL – 7,800|
|60||Janki Corp – 6,900|
|62.5||Minera Steel & Power – 7,850|
|61.5||Minera Steel & Power – 7,400|
|Mangalore||63||KIOCL – 7,750|
Essar Steel, Jindal Steel & Power, Bajrang Power & Ispat & Jindal Saw have sales closed
*Prices as per loaded into wagon
Source: SteelMint Research