Constant decline in prices of pellet sponge and unmoved fines prices have been pressurizing pellet plants in India. This has compelled them to reduce production.
Indian pellet market under pressure: Cause & Effects
- Reduction in lump prices by Odisha miners: Major merchant miners in Odisha have recently reduced lump (5-18 mm) prices in the range of INR 150-350/MT. On the other hand fines prices continue to remain same. Thus, making lump buying attractive compared to pellet.
- Reduced margins: Pellet manufacturers who are hit hard by high cost of raw material (fines) are incurring losses. Owing to this they have reduced their fines purchase from miners and have curtailed production for their own requirement
- Sharp fall in prices of pellet sponge : Sharp fall in prices of pellet sponge (by upto INR 2,000/MT M-o-M) across India has depressed the buying sentiments of pellet sponge manufacturers
- Cheaper availability of imported lump: Talking about western India, imported South Africa lump have become cheaper over falling global iron ore prices and spot lump premium. This has adversely hit western India pellet prices and have fallen by INR 550/MT
Odisha iron ore prices as per loaded to wagons & inclusive of Royalty
Barbil pellet prices are loaded to wagons; excise duty & VAT as applicable
updated till 01 Nov’15
Source: SteelMint Research
Looking at thin conversion spread, many pellet plants have become unoperational or have curtailed production. Pellet plants are utilizing pellets for their own captive usage and are restraining supplying pellets in the merchant market.
Indian pellet prices down by INR 100-400/MT W-o-W: Pellet prices have witnessed correction in eastern India and have fallen by INR 100-400/MT W-o-W. While in rest parts of our country prices continued to remain at same levels as they were observed last week.
Indian Pellet Prices as on 01 Nov’15
|
City |
Grade | Prices | W-o-W | M-o-M |
|
(Fe %) |
||||
| Barbil* | 63 | 3,700 | -100 | -300 |
| Keonjhar | 63 | 3,200 | -400 | -400 |
| Jharsuguda | 63 | 3,800 | -200 | -500 |
| Durgapur | 63 | 4,300-4,500 | -100 | +50 |
| Raipur | 63 | 4,500 | 0 | -150 |
| Bellary | 62 | 4,300-4,400 | 0 | -250 |
| Kandla | 63 | 4,800 | 0 | -550 |
Basic prices in INR/MT
* loaded to wagons
Source: SteelMint Research
How will be the scenario of iron ore & pellet market in the near term?
Reduction in fines purchase will lead to increased inventory of fines with Odisha merchant miners. As a result of this the miners might cut fines prices in the near term. This might give a sigh of relief to the pellet makers.
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