KIOCL, a state owned Iron Pellet producer having 3.5 MnT pa plant, floats e-tender for export of Iron Pellets during Jun’14.
The tender will be held between 14:00 hrs IST on 10 Jun’14 and 14:00 hrs IST on 11 Jun’14 among empanelled customers.
The company had increased prices by 6% on 4 Jun, 2014. Prices have improved after 3 months owing to increase in production cost and better demand. The company is offering Fe 63.5 Pellets at INR 8,250/MT (USD 139/MT) Ex-Works Mangalore and INR 8,500/MT (USD 143/MT) FoB Mangalore port to domestic buyers.
KIOCL had exported 0.04 MnT of Iron Pellets in FY11 and 0.5 MnT in FY12 whereas there were no exports in past two fiscal years.
The table below shows that KIOCL cost of exporting Pellet is at USD 160/MT FoB but current export prices stands at around USD 124/MT FoB. Chinese spot Iron ore prices for Fe 62 grade is at USD 93/MT (↓ USD 11/MT M-o-M).
|
KIOCL’s Total Cost of Exporting 1 tonne of Fe 63 Iron Pellet |
Export |
Domestic |
|
Cost of 1 tonne of Fe 64 Iron ore fines from NMDC’s Chhattisgarh mines |
3,160 |
3,160 |
|
Royalty @10% |
316 |
316 |
|
From Baiadila mines to Vizag Port (552 kms) |
2,700 |
1,100 |
|
From Vizag Port to Mangalore port (USD 6-7) |
385 |
385 |
|
From Manglore port to KIOCL |
50 |
50 |
|
Landed cost |
6,611 |
5,011 |
|
Cost of Making Pellet |
|
|
|
Iron ore fines (Requires 1.2 tonnes fines to make 1 tonne of Pellet) |
7,933 |
6,013 |
|
Other costs |
1,500 |
1,500 |
|
Port Charges |
50 |
50 |
|
Total Cost |
9,483 |
7,563 |
|
Realization* |
7,347 |
8,250 |
|
Operational margins (in INR/MT)# |
(-) 2,136 |
687 |
* Current export price of 1 tonne of Pellet = USD 124 FoB*59.25 (INR)
* Domestic offers at Rs 8,250/MT for June 2014
# Depreciation and other admin costs are not included
Source: SteelMint Research
As per media reports “Last week, Indian steel secretary held discussion in this regard with a business delegation from Iran and the deputy minister of mines, government of Iran, and offered to make use of the excess pelletisation capacity available at KIOCL’s Mangalore plant for pelletisation of Iron ore fines from Iran,” said Malay Chatterjee, chairman-cum-managing director, KIOCL Ltd.
In spite of having operating capacity of 3.5 MnT pa KIOCL produced 1.7 million tonnes and sold 1.6 million tonnes of pellets in 2013-14. It has offered the remaining 50 per cent of the capacity to Iran for making pellets. “We have offered Iran that we can import iron ore from them and convert it into pellets with Fe content of 64 per cent and export it back to their steel mills,” Chatterjee said.
He said it would be economically viable to bring Iron ore from Iran and convert it into pellets in India because the company is already sourcing Iron ore from NMDC Chhattisgarh, which is situated at a considerably longer distance than Iran. It would also benefit them by reducing overhead expenses and help them make use of the unutilized capacity.
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