Bhubhaneshwar,India
- Indian pellet exporters hesitant to take orders on logistical issues
- Offers stable at around US$139/t FOB East Coast India
- Prices have gone up by Rs 1,000/MT in last one month
Indian iron pellet exports, which had gone up significantly last month, primarily on falling Rupee and low domestic prices, now have shown resistance on logistical issues. Exports surged from Indian eastern region when domestic pellet prices fell to Rs 6,000/MT in Odisha and Rupee hit an all time low of 69 per USD. Almost every pellet manufacturer executed an export deal.
Where is the problem
With increase in road movement of iron fines to the most preferred port in eastern India, Paradip (as transporting through rail is not viable on differential freight charges), pellet exporters too jumped into the race, resulting in huge traffic jam at Paradip port. Thousands of trucks waiting in queue to unload their cargo. Which further resulted in increase in truck freight by Rs 300-400/MT
Currently freight cost of carrying one tonne of iron ore fines or Pellet to Paradip port through truck is around Rs 2,400/MT and through Rail is around Rs 2,750/MT (for exports, including all charges)
Pellet exporters say, despite high railway freights, they are left with no other option but to transport it through rail as they have export commitments.
How will it impact domestic market
Since pellet manufacturers are cashing on higher export parity, prices in domestic market have gone up by almost Rs 1,000/MT. However it seems there is limited scope of prices going up further as exports have its own limitation. With rising pellet capacity, manufacturers have to focus in domestic market.
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