India’s largest Iron Pellet producing state Odisha which almost doubled its installed capacity in FY 14 to 25.8 MnT pa, is going through rough times for more than a couple of months now. The raw material has been sold at all time low price of INR 6,100/MT (loaded to wagons at Barbil).
Last deal of 3,900 MT Pellets with Fe 63 was closed at INR 6,100/MT (USD 102/MT) by a Pellet manufacturer based in Barbil. Sources confirm that material was sold to a UP based Sponge iron manufacturer.
Pellet prices have touched all time low again in Barbil owing to increase in its merchant availability and low demand from Sponge iron plants in Odisha & West Bengal, which are operating at 65% capacity and utilize 20% & 50% of Pellets respectively as raw material burden.
Since Indian Government imposed a 5% export duty on Pellets w.e.f 27 Jan, 2014, drop in realization from overseas trades hit domestic prices. Only a couple of manufacturers located in the eastern region of India are offering Pellets to domestic takers presently as is not viable to sell at low prices.
Previous to this, prices came down to INR 6,100/MT on 22 Jul, 2013 when finish steel off take and prices squeezed, coupled with lack of cash flow and delay in projects. Pellet prices have touched all time low again, owing to increase in its merchant availability and low demand from Sponge iron plants.
Odisha Government halts Truck Movement of Iron Ore amid General Elections
Odisha Government has released a circular to halt movement of trucks from 05-20 Apr, 2014 amid general elections to be conducted in the state on the 10 Apr & 17 Apr, 2014. Supply of Iron ore from mining rich belt of Joda, Koida & Barbil might go down.
Therefore, Pellet manufacturers have held offers as they foresee an increase in demand of Pellets over Iron ore shortfall. Companies such as Jindal Steel & Power and Bhushan Power & Steel should benefit as they have their own railway siding and do not use trucks for movement.
Low Cost Pellets from Bhushan pulls down Central India Offers
Procurement of Pellets from Bhushan Power & Steel at a landed cost of INR 7,800-7,900/MT in Central India has pushed Raipur (Chhattisgarh) based producers to slash prices to similar level.
Pellet maker in Tatanagar (Jamshedpur) has quoted offers at INR 6,300/MT (Ex-plant/loaded into wagons) following the price movement in Odisha.
Trade Offers
- JSPL is offering Fe 63.5 Pellets at INR 6,550/MT (loaded into wagons at Barbil)
- Bhushan Power heard to have sold last cargo at around INR 6,800-6,900/MT (Ex-works Jharsuguda)
- Pellet manufacturers in West Bengal are offering Fe 63 Pellet at around INR 6,750-6,800/MT (basic)
- Kamachi Steels (Chennai) to unload 33,000 MT Iron Pellet cargo from KIOCL (Mangalore)
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