India: Essar Steel to ship 100,000 MT Iron Pellets to Iran by Nov’14 end

Essar Steel, having India’s largest Iron Pellet capacity of 14 MnT pa (6 MnT at Paradip and 8 MnT at Vizag), is to ship 102,000 MT high quality DR grade Pellets to Iran by Nov’14 end.

Essar Steel has concluded an export deal with Iran based DRI plants in the price range of USD 130-133/MT FoB Vizag port, including export duty. Export of Pellets attracts a duty of 5%.

In contrast to low margins from export to China, which operates Blast Furnaces and imports BF grade Pellets, export to Iran has fetched better prices. DR grade and superior quality i.e. Fe 66% Pellets are hardly available in Indian market, which is required by Iranian DRI plants.

The deal comes up as a surprise, at a time when global Iron ore prices are trading at 5 year low. Market participants have justified that there is scarcity of high grade DR Pellets in the global market.

At Vizag port, vessel named ‘Avang’ is at berth and 50,000 MT Pellets (Fe 66%) is under loading. The vessel is anticipated to leave Vizag port by 29 Nov, 2014; unloading port is Bandar Abbas, one of the biggest sea port in Iran. Another vessel named ‘Artman’ is at anchorage since 27 Nov, 2014 and is expected to leave the port on 30 Nov, 2014 carrying 52,000 MT Pellets (Fe 66%).

Essar Steel procures Fe 64% Iron ore fines from NMDC’s Chhattisgarh mines. The company has a 8 MnT pa beneficiation plant at Kirandul. The material is pumped as slurry through a 267 km pipeline, to Vizag.

On 19 Nov’14, Kredence Multi Trading, a company of Uttam Galva had shipped 55,000 MT Pellets to Iran from Vizag Port, which was procured from Essar Steel.

Iran uses 100% DR grade Iron Pellets as basic raw material for steelmaking. There is no surplus Pellets in Iran at this stage, so DRI plants are running short of Pellets and many new DRI plants are under construction. According to SteelMint Research, Iran’s current DRI capacity at 17.6 MnT is facing shortfall of 5.1 MnT Pellets.

Operational DRI Plants with 17.6 MnT pa Capacity

Capacity in MnT pa
Source: SteelMint Research