India: 35,000 MT Iron Pellets shipped to Iranian DRI Producer

Indian Iron Pellet exporters today shipped 35,000 MT Pellets from Paradip Port. The unloading Iranian Port is Bandar Abbas.

With recent slowdown in Chinese spot Iron ore market, Indian Pellet manufacturers and exporters are eyeing new markets. Not many Indian Pellet exporters have explored Middle East market. But certainly, with bleak demand in China and rising Steel production in Iran, Indian Pellet exporters are forced to look for new possibilities.

Vessel named Kai He is carrying DR grade Pellets with 64% Fe. A couple of Iron Pellet manufacturers based in Keonjhar have sold 15,000 MT and 25,000 MT (+/-10%) Pellets respectively, to a Delhi based trader.

Though the deal between manufacturers and trader was finalized previously, shipment has been a little delayed because of New Year holidays in Iran. The deal was closed at INR 9,400/MT (USD 155/MT) delivered to Paradip Plot, including a 5% export duty. Freight from Indian east coast to Bandar Abbas should be in the range of USD 20-23/MT.

Mobarakeh Steel, Iran’s largest Steel maker having 7 MnT pa DRI installed capacity is likely the end user of India Pellets. The company has a 7 MnT pa Iron Pellet producing capacity and uses it for self consumption.

Installed Capacity in MnT pa
Source: SteelMint Research

Iran is the largest steel producer in Middle East (15.5 MnT in 2013) and world’s 2^nd largest DRI manufacturer (11.6 MnT in 2013). DRI producers in Iran are running short of Pellets as domestic supply is quite low. Exporters of Pellet to Iran are concentrating on long term supply agreements to other countries because of which there is shortfall of DR grade Pellets.

Also, imported Pellets are quite costlier from other countries with longer delivery time as compared to India. Voyage time from India to Middle east countries is 15 days to a month, depending upon the movement of material from plant to port.

In addition, Bahrain Steel and other exporters aren’t supplying Pellets to Iran as of now because import conditions in Iran are unfavorable over various political interruptions. Therefore, low availability has pushed Iranian DRI plants to procure Pellets from Indian manufacturers.

There is a huge requirement of Pellets in European countries too. But voyage time of about 2 months or more has restricted Indian exporters to close deals because of ambiguity over price trend.