Essar Steel, having 8 MnT pa Iron Pellet plant in Vizag (Andhra Pradesh) is focusing on domestic sales. The company has shipped 45,000 MT of Fe 63.5/64 & BF grade Pellets.
On 19 Feb, 2014, vessel Nemtas 1 had carried 45,000 MT Pellets to Chennai (Tamil Nadu). Kamachi Steel has purchased it at INR 7,500/MT (FoB Vizag Port), freight charges at USD 6/MT.
On what grounds has the buyer preferred Essar’s material?
- Pellet producers in Karnataka namely MSPL & Xindia Steels are offering Pellets at INR 8,050/MT (Fe 62.5) and INR 7,900/MT (Fe 62) (basic) respectively. KIOCL is selling at Fe 63 material at INR 8,200/MT (basic).
- Procurement from the above companies will cost (landed) INR 9,100-9,550/MT. Whereas, Essar’s high grade material costs (landed) only INR 8,250/MT.
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Comparison of Landed Cost from Essar, Karnataka & KIOCL |
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|
Particulars |
Essar |
MSPL & Xindia |
KIOCL |
|
Prices (INR/MT) |
7,500 |
7,900-8,050 |
8,200 |
|
Vessel Freight/By Road* |
400 |
1,200-1,300* |
1,300* |
|
Handling Charges |
150 |
– |
50 |
|
Freight (Port to Plant) |
200 |
– |
– |
|
Landed Cost to Chennai |
8,250 |
9,100-9,350 |
9,550 |
All Prices are in INR/MT
Source: SteelMint
Why is the company focusing on domestic sales?
Though, Essar uses Pellets for captive purpose, it is operating its 10 MnT pa Hazira steel plant at 30% capacity only. Low steel demand, liquidity crunch and poor Iron ore supply has hit production levels. Therefore, most of Pellets is being offered to domestic buyers.
In Apr’ 13-Jan’ 14, Essar exported 329,280 MT Fe 63.5/64 BF grade Pellets manufactured at Paradip, to buyers based in Middle East, Southeast Asia & China.
Essar to touch 20 MnT pa Pellet capacity
The companies 6 MnT pa Pellet plant in Paradip (Odisha) has an installed capacity of 6 MnT pa. In FY15, another 6 MnT pa Pellet plant will be commissioned in Paradip.
Essar will be India’s largest Pellet making company in terms of 20 MnT pa capacity, without any captive Iron ore mines.
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