India: Pellet Prices uptick in Odisha; Companies await Iron Ore Stockpile Sale

The troubled Indian Iron ore industry has pulled down Pellet production, as plants have either gone out of business or operational at lowest workable capacity, being controlled by Iron ore quantity. To add, Pellet prices ascend to INR 7,800/MT loaded (USD 130/MT) in Barbil.

State government’s consent to sell 26 MnT Iron ore, laying at mines head of operational (14 MnT) and non-operational (12 MnT) private mines, will release the Pellet industry from ongoing circumstances to a certain point.

A senior official of Directorate of Mines, Odisha government told SteelMint, “We are looking forward to receive an official notification, as the state government has permitted to sell Iron ore laying at mines head”.

Arya Iron & Steel and Shyam Metaliks & Energy are offering Pellets at INR 7,800/MT (loaded) and INR 8,200/MT (ex-works) respectively. BRPL offers are quoted at INR 7,500/MT (ex-works) respectively.

Iron ore trauma has surpassed over and above the normal thought process and playing a waiting game for the Pellet industry. However, maintaining the ban on mining, High Court permits R P Sao to dispatch almost 1.2 MnT Iron ore  stockpile at Joda mines head, between 04 Sept’14 and 04 Dec’14. The merchant miner has an annual capacity of 4.5 MnT.

Indrani Patnaik’s Joda Mines are open to orders for state based buyers; prices of Fe 62 Fines are at INR 3,100/MT and 10-30 mm & Fe 62 (Sc ) are at INR 5,100/MT (loaded & including royalty). Additionally, Ardent Steel obtains EC from MoEF and has re-started Pellet plant – offers at INR 7,400-7,500/MT (ex-works).

JSPL, the top Pellet producer in Odisha, has ceased production from Barbil based 4.5 MnT pa plant. Whereas, the lately commissioned one (4.5 MnT pa), is running at nearly half the capacity. The material is being transported for in house consumption.

The company is unable to deliver Pellets in line with demand over Fines scarcity. Its Tensa mines in Koida, having 2 MnT pa capacity is fulfilling an insignificant portion of requirement.  Sarda mines, the chief Iron ore source of JSPL, are yet to start again on lack of EC and other necessary approvals since 01 Apr, 2014.

Beneficiation Capacity in MnT pa
Pellet Capacity in MnT pa
Source:  SteelMint Research

Essar Steel has slowed down the starting operations from the new Pellet plant, with no clarity of projected timeline. Its coastline customers in Chennai, Gujarat and Goa are tempted towards imported Pellets, having superior quality at workable prices. Thus, it is utilizing 20% of the set up capacity.

JSPL, Bhushan Power & Steel, Minera Steel & Power, Bajrang Power & Ispat, Jindal Saw and Sree Metaliks aren’t offering Pellets at present.

OMC Baripada, Gandhamardan, Khandbandh & Daitari mines, Rungta’s Oraghat, Sanindpur & Jajang mines, Essel’s Koida mines and S N Mohanty’s Jaldihi Sundergarh mines are open to domestic market requirement. M G Mohanty’s Sundergarh mines is producing inadequate quantity of Fines.

Indian Iron Pellet Prices

Basic prices in INR/MT
Source: SteelMint Research