Stable Pellet Prices In Central India Despite Iron Ore Price Decline

While there were concerns that NMDC’s price revision would negatively impact the Pellet (Iron Ore Pellet) market, manufacturers have managed to maintain firm prices due to the existing orders. Despite the decline in NMDC’s Iron Ore prices for June deliveries, Pellet prices in central India’s Raipur market have remained stable. The future orders have been less, leading participants to anticipate a potential price reduction, which will largely depend on sponge Iron price movement.

NMDC’s Price Revision

• NMDC, India’s largest Iron ore miner, has recently reduced prices from its Chhattisgarh mines. With effect from 30 May 2023, the company has cut the following prices:
  • For DR CLO & Lumps Grade Ore- By Rs 300/ton
  • For Fines- By Rs 450/ton

Current Pellet Offers

• The current Pellets offers in Raipur are:
  • Fe 63%- Ranging between Rs 9,000-9,200/ton ex-works
  • Fe 63% High Phosphorous Material- Ranging between Rs 8,800-8,900/ton

• Prices of Pellets (Fe 63%) in other locations are:
  • ex-Durgapur- Rs 8,300-8,400/ton
  • ex-Jharsugda- Rs 8,800/ton
  • ex-Bellary (South India)- Rs 9,800-9,900/ton

• Despite the firm offers in Raipur, only a few urgent dispatch deals have been reported in the spot market of central India, mainly due to declining Sponge Iron prices and expectations of a decline in Pellet offers soon.

Market Scenario

• Sponge Iron Price Decline- As per market assessment by Ofbusiness, Sponge Iron prices have dropped by around Rs 2,000-2,500/ton during the second half of May 2023.

• During the same duration, the Pellet market maintained stability with minor changes of Rs 100-300/ton. Declined Sponge Iron prices have impacted Pellets demand. Weak Steel demand in China has contributed to this cautious approach in the overall Steel market.

• Weakening Exports- The demand for Pellet exports has remained poor due to the overall weak Steel demand in China. As per market experts, there have been no major fresh inquiries for Pellet exports, as declining global Iron Ore prices have led Chinese buyers to exercise caution. Instead of fresh bulk import procurement, Chinese mills are opting to purchase materials that are readily available in the domestic market. Weakening Pellet exports demand further emphasizes the challenges faced by the industry in the current market conditions.

OFB’s Insight

The weakening Pellet exports demand adds to the challenges faced by the industry. Initially, there were concerns that this price revision by NMDC would negatively impact the Pellet market in central India. However, the manufacturers from central Indi have managed to maintain stable prices due to a supply shortage and previous orders. As the market continues to evolve, stakeholders will closely monitor price fluctuations and demand trends to navigate the uncertain landscape of the Pellet industry in central India.

Read more: Competitive HRC Import Deals May Further Weigh On Domestic Flat Steel Market

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