With landed cost of Odisha iron ore to Chhattisgarh becoming comparatively lucrative, Chhattisgarh based plants are seen preferring Odisha iron ore over NMDC ore. Pressure on NMDC to reduce price will increase further for May’16 delivery.
National Mineral Development Corporation (NMDC) had raised iron ore prices by INR 140-270/MT w.e.f 4 Apr’16. Prices of Baila lump and Baila fines moved up by INR 150/MT. While, DR-CLO prices strengthened by INR 270/MT. Following this, Chhattisgarh based sponge iron makers and pellet manufacturers have reduced purchases from NMDC in Apr’16.
Central Indian sponge iron offers weaken by upto INR 750/MT in Apr’16
Sponge iron prices in Raipur have weakened on a monthly basis (down by upto INR 750/MT M-o-M). Sponge prices have fallen due to over production and limited outstation sales.
Iron ore sourcing from NMDC by CG based plants falls significantly in Apr’16
As per railway movement data maintained with SteelMint, in Apr’16 (till 26 Apr’16) Chhattisgarh based plants have procured only 34 rakes of iron ore from NMDC Chhattisgarh against 75 rakes in Mar’16.
While, the plants have sourced 217 rakes of iron ore from Odisha till 21 Apr’16 against 255 rakes in Mar’16. Iron ore sourcing from NMDC (C.G) by C.G based plants has nearly reduced to half on monthly comparison basis.
Cost comparison of iron ore landed to CG
Odisha landed cost of iron ore to CG including Royalty, DMF, NMET in Raipur for Apr’16
| S No | Mines | Size (mm) | Fe | Ex Mines Price | FoR price (Including Loading Cost) |
Load Siding |
Railway Freight | Landed at Raipur |
| 1 | Essel Mining | 5-18 | 62% | 2,250 | 2,600 | Bursuan | 910 | 3,510 |
| 2 | Indrani Patnaik | 5-18 | 63% | 2,150 | 2,400 | Jaroli | 1,250 | 3,650 |
| 3 | Serajuddin & Co | 5-18 | 63 | 2,150 | 2,410 | Jaroli | 1,250 | 3,660 |
| 4 | OMC Ltd (Koira) | 10-40 | 62 | 1,800 | 2,165 | Barsuan | 910 | 3,075 |
| 5 | OMC Ltd (Gandhamardan Mines) | 5-18 | 65 | 2,200 | – | By Road | 1,250-1,450 | 3,450-3,650 |
| 6 | KJS Ahluwalia | 5-18 | 63 | 2,275 | 2,700 | Barsuan | 910 | 3,610 |
| 7 | Kaypee Enterprises | 5-18 | 63 | 2,200 | 2,500 | Barbil | 1,250 | 3,750 |
Prices in INR/MT
CST 2% extra on above price
Unloading Siding considered Jaiswal Nico (Pvt Siding)
Punitive and demmurage and ground loss extra as applicable
Landed cost of Kirandul Baila lump (6-40 mm) from NMDC to Raipur in Apr’16
| Particular | Price in INR/MT |
| Ex Mines Price | 2,100 |
| Royalty, DMF and NMET extra | 500 |
| Unloading at Jagdalpur | 75 |
| Transport from Jagdalpur to Raipur | 1,100 |
| Landed Cost at Raipur (Ex Plant) | 4,175 |
| Crushing Cost is 15 to 18% for conversion to 5-18MM | 475-525 |
| Final Cost of 5-18 MM after fines sales approx | 4,650-4,700 |
DRI production using Odisha lump, and NMDC lump for CG Based plant: SteelMint has tried to analyse the cost difference arising out of making sponge iron from Odisha lump and NMDC lump. However, it may vary from plant to plant as handling and operation differ.
| Particular | Odisha (Iron ore) | NMDC Baila Lumps (Iron ore) |
| Cost of Iron ore landed at Raipur | 3,800 | 4,650 |
| Total Cost of Iron ore: (Industry average) | 6,700 | 7,500 |
| Cost if Coal at Current Coal Price of USD 42 RB 3 | 5,000 | 5,000 |
| Other Expenses excluding Interest Depreciation (industry average) | 2,000 | 2,000 |
| Final Cost From Odisha based Iron ore | 13,700 | 14,500 |
| Interest and Depreciation Extra | 1,000 | 1,000 |
| Final Cost After Interest and Depreciation | 14,700 | 15,500 |
Prices in INR/MT
Sponge iron industry is tussling with the high cost of iron ore and low selling price. The conversion spread in present scenario has widen enough to reduce DRI production by 30-40%. Market participants expect NMDC to reduce iron ore prices substantially to continue DRI production in CG state.
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