India: Import Viability hits Domestic Pellet Market

Indian Pellet prices remain unvarying as manufacturers wait for Iron ore miners to pass on the 5% royalty rate hike to consumers.

Indian government has notified the increased Iron ore royalty rate at 15% on sales price ad valorem basis w.e.f 01 Sep, 2014. The increased royalty rates on mineral have come into force from date of the notification.

“Odisha, India’s largest mining state, is waiting for opening up of 9 private mines which are non operational since 16 May, 2014. Eastern region based Pellet makers worry on scarcity of high grade Iron ore Fines. Manufactures having beneficiation plant are at an advantage over the ones – without the facilities to beneficiate low grade Iron ore Fines and facing tough times. Thus, apart from rigid prices, low availability of high quality ore has also emerged as a crucial aspect recently,” said industry experts.

Pellet makers like JSPL, Ardent Steel, Bhusan Power & Steel, Bajrang Power & Ispat and Adhunik Metaliks aren’t offering Pellets for domestic sale currently. KIOCL is still to review prices for Sep’14 delivery and Minera is utilizing the material for in-house consumption.

Growing imports of Iron ore Lump and Pellets in North-West region have hit sales volume of Jindal Saw, which cater to the requirement of Gujarat market. The company is to take a call on prices as purchasers are quite confident of not placing any bookings, even at lower prices. Import potential is high over favorable exchange rate and Chinese Fines prices at USD 84/MT CFR China.

Karnataka based Pellet manufacturers indicate that demand is still subdued owing to ongoing monsoon season. Strike on transportation of materials by truck taken place last week for about 3-4 days in the state has affected Iron ore Fines movement, in turn affecting Pellet production. Demand may pick up by month end, say Pellet producers.

Indian Iron Pellet Prices

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