India: Iron Pellet Prices in Odisha lose Strength; might lower further

Iron Pellet prices in Odisha lose strength and will continue to be under pressure, until and unless export market picks up.

Pellets are being offered at INR 6,800-7,000/MT (Ex works Barbil) presently. Stock position is high as off take from domestic takers is slow and supply is increasing.

    Indicative Prices                                                               Source: SteelMint
Basic prices in INR/MT I *loaded to wagons

In Q4 FY14, Pellet prices in Odisha might not drop sharply owing to restriction of only 50% Iron ore sales allowed within the state. Also, an increase in Iron ore production capacities is expected during next fiscal.

Odisha Iron Ore Production drops to 6.7 MnT in Jan’14

Iron ore production in Odisha came down from 7.3 MnT in Dec’13 to 6.7 MnT in Jan’14. Serajuddin mines production increased owing to EC limit of 15 MnT pa, which was 4.5 MnT pa earlier.

Essel Mines (EML) mining operations in Jhilling is on hold owing to expired mining license. Hence, it’s output dropped by 74% M-o-M. The miner sells about 3.5-3.6 MnT pa Iron ore in domestic market.

   Qty in ‘000 MT
   Source: SteelMint

Exporters hold a wait-and-see attitude

Low Pellet offers at USD 140-143/MT FoB East Coast India from Iranian & Korean buyers and imposition of 5% duty on exports have made Indian Pellet exporters to hold a wait-and see stance.

Exporters are looking for prices at around USD 150/MT FoB including duty as selling at lower offers will hurt margins.

No deal has been closed this month and exporters don’t foresee a ray of hope in near future. Chinese demand is dull after New Year holidays because of stockpile and lacks of direction as of till now.

Odisha is India’s largest Iron ore & Pellet producing state. Current installed capacity of Pellets is 35 MnT pa. In Q1 FY 15, JSPL and Essar Steel (Paradip) will add 4 MnT and 6 MnT pa capacity respectively. Also, KJS Ahluwalia will start 1.2 MnT pa plant by the end of 2014.