Iron Pellet producers in Odisha have increased their offers on grounds of low inventory and Iron ore shortage, after suspension of operations for 10 merchant mines, which collectively produced 19.1 MnT in FY14.
According to Director of Mines, Odisha, resumption of operation by captive mines might take about two months, but merchant mines is going to take even more time than this.
JSPL, the leading Pellet producer with an installed capacity of 8.5 MnT pa, is offering Pellets at INR 9,100/MT (loaded to wagons at Barbil) for June delivery, as the company has already received 3-4 rakes bookings for this month end.
Jajpur based Brahmani River Pellets (BRPL) and Bhushan Power & Steel, in Jharsuguda, are offering the material at INR 9,000/MT (basic); another manufacturer quotes INR 8,800/MT (ex works Jharsuguda) for their Pellets. Other producers namely Arya Iron & Steel, Ardent Steel and Essar Steel hold offers.
Following East India Pellet prices, Adhunik Metaliks in Tatanagar (Jamshedpur) is offering their Pellets at INR 9,100/MT (ex works). Godavari Power & Ispat (GPIL) is likely to raise prices in line with Odisha market. Pellet makers in Bellary (Karnataka) maintain Fe 61 Pellet prices at INR 7,700/MT (basic) and Fe 60 at INR 7,200-7,350/MT (basic).
Pellet Consumers delay Buying
Although, buyers hold back Pellet purchases at prevailing price level, they may eventually be forced to procure the material as an improved Iron ore supply situation looks difficult in near term.
Sponge iron plants are on the verge of getting over with their existing raw material stockpile. Only Rungta mines is offering Iron ore Lumps (Fe 63 & 5-18 mm) at INR 6,800/MT (basic prices including royalty) from Joda mines and might not be able to meet with an immediate delivery because of rise in demand.
A couple of factors such as costing and instant delivery will push Sponge iron producers to procure expensive Pellets. About 1.45 MT of Pellets is required for making 1 MT of Sponge iron in comparison to nearly 1.7 MT of Iron ore Lumps.
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