- Monsoon disruptions limit iron ore availability in market
- Pellet prices rise sharply on improved downstream demand
Lloyds Metals and Energy has increased its iron ore lump and fines offers by INR 250/t ($2.5/t) and pellet offers by INR 500/t ($5/t) in Chandrapur, Maharashtra, effective 29 August. The hike was primarily driven by tightening availability of iron ore amid monsoon-related supply disruptions and lower production, coupled with improved realisations in the sponge iron and finished steel markets.
Following the revision, the miner’s lump offers stood at INR 10,250/t ($107/t) FOR Chandrapur, while pellet offers rose to INR 11,250/t ($118/t) ex-Chandrapur. Fines FOR Raipur offers were heard at around INR 7,250/t ($76/t).
Stronger sponge iron realisations have provided additional support to pellet and iron ore demand. Monthly average P-DRI prices in Hyderabad rose by INR 1,600/t ($17/t) m-o-m to INR 27,700/t ex-works in August to date, improving the conversion economics for sponge iron producers and enabling them to absorb higher raw material costs.
Monsoon-related mining and logistics disruptions, combined with relatively low production, have reduced spot availability, allowing the miner to pass on higher replacement costs through increased offers. At the same time, firm sponge iron and finished steel realisations have kept downstream margins supportive, limiting resistance to higher iron ore and pellet prices.
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