India: BMM Ispat offers Pellet Sponge at INR 18,500/MT Ex-Bellary

• Sponge iron prices stable in Bellary (Karnataka)
• Rising Iron ore prices is a major concern for the industry
• JSW may increase Iron ore purchases from Karnataka after mining operation slowed down in Odisha
• Sponge iron prices in other part of country stable owing to restricted supply of Iron ore 

BMM Ispat, India’s largest Coal based merchant Sponge iron manufacturer having an installed capacity of 0.69 MnT in Hospet region of Bellary’s district (Karnataka), is offering Pellet Sponge (P-DRI of FeM 75%) at INR 18,500/MT on Ex-Bellary basis.

BIOP (Bellary Iron Ore Private Ltd), another major Sponge iron manufacturer in the same region, is offering 78 FeM C-DRI at INR 20,800/MT. 75 FeM C-DRI is being offered by the other manufactures at INR 19,500-19,900/MT on Ex-Works basis.

Sponge prices have been stable in the state despite rising Iron ore prices in the e-auction. Market participants mentioned that on one hand Iron ore prices are increasing and on the other low demand of Sponge from Andhra Pradesh & Telangana has weighed upon the Sponge prices.

Sponge iron industry in Karnataka, which accounts for about 9-10%of the country’s total Sponge iron capacity, is struggling hard for its survival owing to shortage of Iron ore. While,  most of the Sponge iron units are running at a very low utilization rate and the rest prefers to shut their plants.

There are almost 50 small & medium scale units, with a combined production capacity about 4.25 MnT. Most of these units prefer to buy Pellets over Iron ore lumps sold through e-auction.

JSW reduced Iron Ore Movement from Odisha

After the Supreme Court suspended 26 mines in Odisha over deemed renewal issue, JSW Steel has been forced to cut their sourcing from Odisha. In a railway movement report compiled by SteelMint, it is noted that JSW Steel’s Iron ore movement from Odisha has moved down to an extent of 30% in quarter-1, 2014.

JSW Steel had sourced around 3 MnT of Iron ore from Odisha & Jharkhand in FY14 but numbers are expected to come down in this financial year. It is anticipated that JSW will aggressively participate in Karnataka’s coming e-auction.

Company has also started to import Iron ore from countries like Africa, Canada & Australia, but that may not be enough to compensate the loss from Odisha.