As Indian Rupee gains strength against US dollar, the export parity on Iron pellets has flown away. Indian domestic Pellet prices, which had gone up sharply around6-7 weeks back is likely to come down this month, in line with falling rupee and cheaper iron ore available in domestic market.
What do Pellet Exporters Say?
With Rupee coming back to 61-62 levels, correction in global iron ore & pellet prices and railway freight going up by almost INR 600/MT on exports of Pellet (thanks to busy season charge by Indian Railways), it is not viable to export Pellets at current prices, which are hovering at INR 7,200-7,300/MT (Loaded to wagons) at Barbil (Odisha).
Current cost of exports are at USD 161/MT (Rs 10,000) on FOB basis, however demand is at around USD 140-142/MT. With Indian exports of Pellet coming down, it is certain that supply in domestic market will increase, which will lead to fall in prices.
Recent Pellet Deals from India
-Trade Sources
What do Indian Steel Manufacturers Say?
There is hardly any demand at current prices, which had gone up only due to Rupee factor. Moreover iron ore lumps are available at a much cheaper price than Pellet. There is a scope of correction in prices by almost INR 400-500/MT. Also with monsoons getting over, Iron ore's production will improve in coming months.
Big miners like Rungta and Essel are offering CLO (5-18mm) of grade 63% at around Rs 6,400/MT and other miners at around Rs 5,200/MT for 63%, not many would be interested in taking pellets.
Comparison Between Iron Ore and Pellet Prices in Barbil (Odisha)
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