India’s Pellet making capacity of 66.6 MnT, which observed an exceptional escalation since 2009, is unable to meet the industry’s demand.
Pellet plants are either non operational or running at nearly 25% capacity and facing tough times over Iron ore scarcity, besides existence of 5% export duty, overcapacity and high railway freight charges.
SteelMint foresees no respite from Pellet imports as 5% royalty hike on Iron ore w.e.f 01 Sep, 2014 will make Indian Iron ore & Pellet procurement expensive. To add on, Chinese Fines prices are at 5 years low and Indian currency is strong.
August, 2014 recorded highest import quantity at 133,000 MT, after 77,200 MT in March, 2013. Steelmakers have already imported 54,248 MT BF grade & Fe 65% Pellets from Finland at USD 148/MT CFR Kandla port in Jul’14 and 53,200 MT Fe 65% Pellets from Ukraine at USD 138/MT CFR Kandla in Aug’14. A vessel carrying 79,800 MT Pellets, which is imported by Simec, is at berth at Paradip port.
It has been heard that Fe 65% Brazilian Pellets are being offered at USD 136-137/MT CFR India; landed cost at INR 8,700/MT and Australian material is being offered through a tender process.
Monthly Imports since Mar’13
In the quarter under review, viable import offers supported by strong Rupee, have made imports possible. Restricted availability of domestic Iron ore and Pellets after the Supreme Court had temporarily suspended mining in Odisha from 16 May, 2014, has pushed the steelmakers to seek imports. While, Pellet exports haven’t taken place Jun’14 onward and domestic Pellet prices have sustained at INR 7,500-8,400/MT (USD 125-140/MT).
For the first time in May’12, Paradip port, a major Iron ore exporting port, dealt with Pellet import consignments. Bhushan Steel had imported it from Brazil, citing difficulties in sourcing the mineral locally, over mining and transportation constraints enforced by the Odisha government.
Director at one of the leading Pellet importing company in North-West region says, “The little exchange rate support and international Iron ore prices have made Pellet imports viable. Though, suppliers are active, they aren’t able to supply the required quantity. Indian steelmakers are opting for overseas Pellets for quality and price parity reasons, specially the port based plants. Also, with expected economic indicators growth, buying in dollars looks to be a preferred option.
Australian Pellets have high basicity and can either be used in Indian blast furnaces or for making DRI, which will be consumed in arc furnaces. Pellets from Ukraine and Brazil are also on offer and suppliers are hesitating to sell at prices lower to USD 132-135/MT CFR India. Brazilian Pellets containing high Silica is being offered for November-end delivery.
Low supply of Iron ore in Indian market, which ultimately drags down Pellet production, may not be resolved shortly. In addition, quick recovery in international Iron ore prices from USD 87/MT CFR China levels is unexpected in near term. Thus, Pellet import outlook looks positive in the months to come”.
Leave a Reply