On 27 Jan, 2014, after Indian Government imposed a 5% duty on export of Pellets , margins from overseas sale have squeezed by INR 500/MT.

Though, domestic Pellet prices are unchanged at INR 7,450/MT (ex works Barbil & Jharsuguda) and there is no immediate impact of duty, a downward trend in prices is expected in the weeks to come.

On one side, Rupee hit over 2 months low at below 63 against USD the previous day, which was last seen on 14 Nov, 2013. On the other, Indian government imposed a duty on exports. Rupee is expected to touch 63.5-64 against USD.

“One of the East India based exporter had planned to close deals for shipment each in February & March, which is on hold now. A couple of other exporters, who were about to finalize deals before month end, are working out the same as costing has increased”, said exporters.

Traders shared, “Shortage of vessel exists at Vizag Port and Sagar anchorage because of Chinese lunar new year holidays from 31 Jan-09 Feb, 2014. By end of February only, we see some clarity in Chinese market demand and prices.

Prices of raw material, used for Pellet making are on the higher side and domestic Pellet prices are under pressure now. Removal of Distance Based Charge (DBC) by railways, upsurge in Chinese Iron ore prices and weak Rupee might help exporters”.

Any revision in eastern sector Pellet prices will be noted in other states. Fe 62 Pellet offers are unchanged at INR 8-100-8,300/MT (basic) in Chhattisgarh and at INR 7,900/MT (basic) in Karnataka; low grade is at INR 7,200-7,500/MT (basic).

“Our landed cost of buying e-auction Iron ore is at INR 5,300/MT and demand for Pellets is decent. Big lots carrying sub grade material (Fe 35-57) are being offered by miners, which are not uniform in terms of quality & grade”, told Pellet producers in Karnataka.