Indian Pellet prices correct upto INR 200-300/MT this week owing to weak demand and recent export duty of 5 per cent imposed by Indian Government.
Iron Pellet prices have started witnessing a downward trend owing to fall in exports and weak demand in domestic market. Pellet exports which stood at just above 1 MnT during April-Dec 2013, looks to be almost negligible in January & February 2014.
Arya Iron & Steel having an installed capacity of 1.2 MnT pa in Barbil (Odisha) sold about 20 rakes of Pellets at INR 6,500/MT (loaded to wagons at Barbil)/USD 104.8/MT (Ex mines), claimed a DRI manufacturer based in Gujarat. Another DRI manufacturer based in West Bengal has confirmed buying Pellets from Barbil region at similar levels.
INR is at 62 against USD
A Jharsuguda based manufacturer has offered Pellets at INR 6,200/MT (basic). Presently, few Pellet making companies in Odisha are not offering Pellet because of squeezed margins.
According to Pellet manufacturers, “Offers might weaken further following mismatch in demand (low) and supply (high) of Pellets and non-viability in export market. Though, steel demand and prices are good, Pellets is being offered at cheaper rates in order to get rid of high stock position and no export order.
Low Pellet prices quoted by a single company has an immediate and direct impact as it pushes other manufacturers to offer at a cheaper price.”
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Jindal Steel & Power put sales on hold
JSPL preferred to export Pellets at USD 155/MT FoB East coast (inclusive of 5% export duty) to Jindal Shaheed Iron & Steel, having a 1.2 MnT pa DRI plant in Oman (Middle East) . The company is reluctant to sell Pellets below INR 7,000/MT to Indian buyers.
Though, a couple of Pellet producers are in advanced talks for export contracts, it might too early to anticipate any new deals in this month. Exports are not viable after Indian government imposed a 5 per cent duty on exports of Pellet and spot Iron ore prices corrected sharply in China. Current prices for 63% Fe Pellets are hovering in the range of USD 145-146/MT FOB Indian East Coast.
South India Pellet Prices under Pressure
With falling Pellet prices in India’s eastern region, traders are anticipating a price drop in Southern region. Karnataka has an installed Pellet capacity of 17 MnT pa, JSW being the largest and followed by KIOCL and BMM Ispat.
Market sources also mentioned that low buying interest from Pellet manufacturers in Karnataka’s recent Iron e-auction, indicates that prices are under pressure in domestic Pellet market.
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