Increased supply of Iron ore from domestic miners and cheaper import have put pressure on Indian Sponge iron prices, which have declined by upto INR 200/MT W-o-W and INR 1,500/MT M-o-M.
Recent price cut by Odisha based Iron pellet manufacturers by upto INR 400/MT in a week’s time has signaled an increase in selling pressure on Pellet manufacturers to liquidate stock. Pressure has also mounted to reduce Sponge iron offers.
Indian Sponge Manufacturers prefer Pellet over Iron ore
Arya Iron & Steel, one of the largest merchant Pellet producers in East India with an annual capacity of 1.2 MnT, reduced its Pellet prices by INR 400/MT in a week’s time, owing to sluggish demand. Current Pellet offers are assessed at INR 4,800/MT, as per loaded to wagons at Barbil railway siding (Odisha). However, Rungta mines have preferred to keep offers unchanged. Their offers for Calibrated lump ore (5-18 mm, Fe 63%) are assessed at INR 5,500/MT and Fines (63%) at INR 2,450/MT (loaded to wagons, including royalty).
A C-DRI maker based in East India said, “We regularly purchase Iron ore from Rungta, however, due to non-viability in Sponge iron production, we have booked two rakes of Iron pellet and put a hold on our Iron ore buying till prices match market demand.”
In West Bengal, Pellet sponge is offered at INR 16,200/MT and C-DRI at INR 18,000/MT (+200) due to raw material shortage. In Central India, falling Iron pellet prices in Odisha has put pressure on Raipur based Pellet manufacturers to lower their prices. Iron pellet offers remained at INR 5,900-6,000/MT. Pellet supply also increased in the market as new plant, Jayaswal Neco (capacity 1.2 MnT pa), started its dispatches.
Imported Iron Ore
Indian importers have slowed down their purchases from the global market after Iron ore prices rose by upto USD 10/MT globally in last one month. However, cargoes, which were booked in March and April, are going to be delivered in May. This will increase supply in the domestic market. Current offers for South African lump (6-30 mm; Fe 64%) assessed at USD 72-73/MT, CIF India for June deliveries.
C-DRI & P-DRI Prices as on 5 May’15
| Location | C-DRI | W-o-W | P-DRI | W-o-W | Price Gap (C-DRI – P-DRI) |
| Bellary* | 16,800 | – 50 | 14,800 | – 50 | 2,000 |
| Hyderabad* | 18,000 | – 200 | 15,800 | + 300 | 2,200 |
| Raipur* | 17,600 | 0 | 15,500 | – 200 | 2,100 |
| Durgapur | 17,400 | + 100 | 15,850 | 0 | 1,550 |
*C-DRI: 81-82 FeM; Durgapur: 78-80 FeM
P-DRI: 78-80 FeM
Prices in INR/MT
Source: SteelMint Research
Pellet Prices as on 5 May’15
| State | City | Size (mm) | % Fe | Price | W-o-W | M-o-M |
| Odisha# | Barbil | 6-20 | 63 | 4,800 | – 300 | – 850 |
| Odisha | Jharsuguda | 6-20 | 63 | 5,400 | – 100 | – 350 |
| Odisha# | Keonjhar | 6-20 | 63 | 4,600 | – 100 | NA |
| Chhattisgarh | Raipur | 6-20 | 63 | 5,900 | – 100 | – 250 |
Prices in INR/MT
Source: SteelMint Research
Iron Ore Prices for May’15
| State | Miner | Size | % Fe | Price | W-o-W | M-o-M |
| Odisha# | Rungta | 5-18 mm | 63 | 5,550 | 0 | 0 |
| Odisha# | Rungta | 10-30 mm | 63 | 4,900 | 0 | 0 |
| Odisha# | Rungta | Fines | 63 | 2,400 | 0 | 0 |
| Odisha# | Serajuddin | 5-18 mm | 63 | 4,850 | 0 | 0 |
| Odisha# | Serajuddin | Fines | 63 | 2,250 | 0 | 0 |
| K’ntka E-auction | – | Lump | 62.5 | 2,675 | – | – |
| K’ntka E-auction | – | Fines | 60.5 | 1,560 | – | – |
*15% royalty extra
**15% royalty + 12 % Forest Development Tax (FDT) extra
#Prices loaded to wagons in INR/MT
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