Indian Pellet Production falls over Iron Ore Dearth; Prices Unmoved

Eastern India based Pellet manufacturing companies have either closed down operations or running the plant at lowest possible capacity; depending on the availability of Iron ore fines domestically.

JSPL and Essar Steel are forced to operate only one of their plants at quite low capacity, while, the second plant is non-operational. Arya Iron & Steel, BRPL and Bhushan are also fighting with issues of Iron ore availability since mid-May, after the Supreme Court enforced mining ban on 17 mines running under 2^nd deemed renewal in Odisha.

Essar’s Paradip Pellet plant restarted its production at 20% capacity this month onward but the entire production has been used for captive consumption at Hazira. It plans to offer fresh material at INR 7,500/MT ex-plant.

Pellet producers continue to maintain offers because of moderate demand and constancy in Iron ore prices. They mentioned that Iron ore import is a lucrative option but no strong plans have been set.

Chhattisgarh based Pellet plants aren’t offering the material at present because of enough bookings received or plant is undergoing maintenance.

Indian Iron Pellet Prices

Basic prices in INR/MT
*Prices are as per loaded to wagons
** Delivered Kandla port
Source: SteelMint Research

Domestic Pellet prices are anticipated to gain strength in Sep’14 following Iron ore royalty rate hike by 5%. Indian government has hiked royalty on Iron ore from existing 10% to 15% w.e.f 01 Sep’14, which will push up Iron ore prices and miners’ costing by INR 150-250/MT.