Iron Pellet producers based in Bellary (Karnataka) have raised offers by INR 200/MT because of expensive Iron ore fines in e-auction, which has ultimately pushed up their input cost.

Current offers are standing at INR 7,500/MT (ex works) for Fe 63 material and Fe 60 Pellets is being quoted at 7,400. Lower grade (Fe 58) material is at 6,800.

“Our cost of producing Pellets have gone up by INR 500/MT as miners are charging quite high for fines in e-auction; shortage of fines and high demand has pushed up offers.

The base prices for Fe 63.5-64 fines is around 3,900 (basic) and booking price at 4,100 levels. NMDC had raised Iron ore prices by 300 in Oct-Dec 2013. 

Also, our landed cost of taking fines from auctions is at INR 5,200/MT now, was at 4,700 earlier. Demand in Pellets is just fine as buyers will take some time to migrate to higher prices”, Karnataka based Pellet makers told SteelMint.

In comparison to the requirement of 35 MnT Iron ore in Karnataka this fiscal, supply is around 15 MnT only. Therefore, fines prices might shoot up further in e-auctions. Buyers are lifting lumps too, which is available in ample quantity and is cheaper than fines.

JSW has preferred to purchase Iron ore lumps and crush it into fines (though crushing costs about INR 400/MT) as uncertainty in prices as well as availability of fines exists. Owing to shortfall of Pellets from eastern region, as producers are concentrating on exports market, the company is unable to procure the material from Odisha.

Supreme Court is yet to take a decision about allowing exports of Pellet from Karnataka; hearing might take place the next week.

Pellet prices remain firm at INR 7,300-7400/MT (basic) in Odisha and at INR 8,100/MT (basic) in Chhattisgarh. Supply is low as manufacturers in eastern region are concentrating on export market and one of the plants in Central India is closed down, owing to maintenance reasons.