Arya Iron & Steel, one of the largest merchant pellet manufacturers in the eastern region with an annual capacity of 1.2 MnT has resumed offering pellets in domestic market after almost a month. As per market sources, the pellet maker was seen dealing in export shipments over higher realization compared to domestic prices.
Currently, the offers for Fe 63% pellets are at INR 3,550/MT (loaded to wagons).
Last month, the pellet maker supplied 13 rakes in domestic market.
The following factors may have lead pellet maker to resume domestic trade:
1. Sponge iron prices touch 7-month high- Presently P-DRI prices for 78 FeM in Durgapur are assesed at INR 12,750/MT (delivered) against INR 11,800/MT (delivered) a month back. Thus, demand from sponge manufacturers is likely to remain high in the near term.
2. Global iron ore prices assessed at USD 57/MT – After the steep rise to a level of USD 62/MT, CFR China, iron ore fines (Fe 62%) prices have moved down amid gradual fall in steel prices. Chinese billet prices have moved down by USD 5-7/MT W-o-W.
3. Shortage of rake availability and congestion at ports – Iron ore and pellet export vessels are lined up at eastern India ports resulting in congestion at ports. Also, market participants shared that owing to shortage of rake availability, iron ore rake movements are getting impacted adversely.
4. Considering pellet export offers from India to be around USD 83/MT, FoB India, realization for pellet export is expected to be around INR 4,000-4,100/MT (loaded to wagons). Present domestic offer are at INR 3,550-3,600/MT, just to retain old clientele and pellet buying.
Prices mentioned are monthly average
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