Indian Pellet prices may come under pressure because steelmakers are receiving competitive Pellet offers from international suppliers.
Iron ore prices in the global market turned down to 5 years low i.e. USD 78/MT (INR 4,750/MT) CFR China for Fe 62% and have given an opportunity to Indian steelmakers for imports. Steelmakers have been struggling with inconsistent supply and elevated prices in the domestic market.
In dialogue with steelmakers, it was learnt that 70,000 MT of Fe 64.5 Brazilian Pellets are being offered at USD 105-107/MT (INR 6,400/MT) CFR Indian port for November delivery.
They also confirmed to have received offers for South African lumps (6-40 mm & Fe 64%) at around USD 88-90/MT (INR /5,440MT) CFR India, for capesize vessel, which is to be loaded sometime in November/December.
In contrast to domestic prices, imports are inexpensive by at least INR 400-500/MT (USD 7-9/MT), considering Rupee to remain at 60-61 against USD. Traders confirmed that only few shipments have been finalized and a few are under discussion.
|
Import Cost for Fe 64.5% Pellets |
|||
|
|
Particular |
|
Prices |
|
A |
CFR India |
USD/DMT |
107 |
|
B |
Custom Duty |
2.5% |
2.7 |
|
C |
Ground Loss |
1% (A+B) |
1 |
|
D |
Port Handling |
USD/DMT |
5 |
|
E |
Other Expenses |
USD/DMT |
2 |
|
Total Cost |
|
117.7 |
|
|
In INR |
61/USD |
7,180 |
|
Domestic Pellet (Fe 63%) prices quoted in the range of INR 7,500-8,300/MT (USD 123- 138/MT) ex-works, will come under pressure, provided imported Pellets start reaching Indian ports November onward.
Iron Ore Vessels expected to arrive at various Indian Ports
|
Month |
Berthing Date |
Qty |
Unloading Port |
Origin |
Vessel name |
Receiver |
|
Sep’14 |
30 Sep’14 |
69,300 |
Jaigarh |
South Africa |
Huayang Dream |
JSW |
|
Oct’14 |
04 Oct’14 |
170,000 |
Krishnapatnam |
Australia |
Hanjin Port Walcott |
Tata |
|
Oct’14 |
06 Oct’14 |
170,000 |
Krishnapatnam |
Brazil |
Madeira |
JSW |
|
Oct’14 |
08 Oct’14 |
22,000 |
Haldia |
N/A |
Elena |
Tata |
|
Oct’14 |
09 Oct’14 |
174,800 |
Krishnapatnam |
South Africa |
Lowlands Serenity |
JSW |
|
Oct’14 |
15 Oct’14 |
167,817 |
Krishnapatnam |
Canada |
Partagas |
JSW |
|
Total |
|
773,917 |
|
|
|
|
Qty in MT
Source: Port Sites; Seatrans
Iron Ore Imports to India may touch 8 MnT in FY15
Looking at declining prices in international market and mining embargo in India’s leading mining states – Odisha and Jharkhand, we assume imports can move to 8 MnT this financial year.
Imports (Iron ore & Pellets) have by now crossed 3 MnT in 01 Apr–15 Sep, 2014. And, it will be the highest quantity ever. Imports stood at 3.2 MnT and 0.3 MnT in FY 13 & FY14 respectively.
Indian Pellet Prices
Pellet prices remain almost unchanged in the domestic market. Yet, buying sentiment is low. Current offers for Fe 63% Pellets are in the range of INR 7,500-8,300/MT (USD 123-136/MT) ex–works.
Market participants expect closed mines in Odisha could be permitted to clear up stockpile in about a month. This will enhance Iron ore supply in the domestic market and Pellet prices possibly under pressure.
|
City |
Grade |
Prices |
|
|
(Fe %) |
|||
|
Barbil |
63 |
7,800* |
|
|
Keonjhar |
64 |
7,600* |
|
|
Paradip |
63 |
7,700* |
|
|
Jharsuguda |
64 |
7,800 |
|
|
Jajpur |
64 |
7,500 |
|
|
Durgapur |
64 |
8,300 |
|
|
Mangalore |
63 |
7,750 |
|
|
Bellary |
63 |
8,100 |
|
|
60 |
7,000 |
||
|
Hospet |
61 |
7,500 |
|
|
60 |
7,300 |
||
|
62 |
7,775 |
||
|
Bhilwara |
63 |
7,300** |
*Loaded into wagons
**Delivered to Kandla port
Source: SteelMint Research
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