India: Pellet Prices hit 10-month Low in Odisha

India’s Eastern region contributes about 70% total Pellet capacity of the country. Iron Pellet prices in Odisha based in Eastern region has touched 10-month low owing to dull buying and improved supply of Iron ore.

Current trades for Fe 63% grade are taking place at around INR 6,100-6,500/MT in Odisha and Bengal and INR 7,100-7,400/MT in Chhattisgarh on ex-plant basis.

Arya Iron & Steel, merchant manufacturer based in Barbil (Odisha) with an annual production capacity of 1.2 MnT, is offering Fe 63% Pellets at INR 6,300/MT (as per loaded to wagons).

Some deals have reported to close at INR 6,000-6,200/MT (ex-Jajpur, Odisha) and INR 6,700/MT (ex-Jharsugda, Sambalpur) for Fe 63%+ Pellets on ex-plant basis. Manufacturers in Chhattisgarh have held their offers at INR 7,400/MT (ex-Raipur) and INR 7,100/MT (ex-Bilaspur).

Most of the Pellet manufacturers in Karnataka, Southern part of India, have preferred to cut their production due to low demand. Pellet prices are more or less stable, but falling prices in Eastern India will certainly have some impact. Fe 63% Pellet prices are assessed at INR 7,350/MT.

Indian Pellet Prices

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

Prices may Stabilize

Interestingly, prices have bounced back every time. It has touched INR 6,100/MT levels in Barbil, Odisha. This seems to be a crucial level for Pellet manufacturers as anything below this will hit the margins and most of them will be forced to cut down their production.

*till 19 Jan, 2015
Prices as per loaded to wagons

Iron Ore Import will come down

Indian Iron ore import, which hit an all time high during Apr-Dec in FY15, may see some resistance on account of falling Iron ore/Pellet prices in the domestic market and resumption of Tata Steel mines in Jharkhand & Odisha.

India had imported about 9.6 MnT Iron ore during Apr’14-Dec’14 and expected to import about 12 MnT this financial year.