Low Response In Iron Ore Pellet Industry, NMDC Price Revision Awaited

The Iron Ore Pellet industry in Central India is currently experiencing a low response, primarily due to declining Steel prices. This has led to weakened demand for Pellets, which were in high demand during the first half of May 2023. In this article, we will explore the current prices, demand, and market scenario of the pellet industry.

Latest Updates

• Limited Procurement- As industry experts reported to OfBusiness, only Sponge makers with urgent material requirements are currently procuring Pellets. Participants are eagerly awaiting the price announcement by NMDC (National Mineral Development Corporation), the sole supplier of Iron Ore to Steel Industries based in Chhattisgarh, Central India.

• Current Offers and Deals- Fe 63% Pellets current offers range between Rs 9,000-9,200/ton ex-works in Raipur. Some Sponge makers claim to be receiving offers (for slightly high phosphorous content) at around Rs 8,800-9,000/ton ex-Raipur.

• In other major locations, pellet prices hover around:
  • Rs 8,600-8,700/ton ex-Durgapur
  • Rs, 8,600-8,700/ton ex-Jharsugda
  • Rs 9,600-9,800/ton ex-Bellary in south India.

• Only a few deals have been reported in these offers. However, due to sufficient orders with suppliers, prices are stable compared to last week, despite a sharp fall in Sponge Iron prices by around Rs 1,000-1,500/ton week on week.

• Price Reduction- Considering the decline in Steel and Sponge Iron prices, industry experts believe that NMDC should announce a price reduction. Furthermore, the weakening trends in the international market are likely to compel Indian miners to lower prices for June 2023 orders.

• Softening Prices and Weakening Exports- Consequently, pellet prices are expected to soften if the Steel demand continues to remain low. Additionally, the anticipated increase in the supply of Pellets in the spot market is unlikely to provide support to the industry. As exports from the Indian market continue to weaken, the domestic supply is expected to remain strong.

OFB’s Insight

Prices in central India are stable because of short supply since mid of May 2023. Currently, the pellet industry in Central India is dull due to the decline in Steel prices. Declined Sponge Iron prices and weak global trends indicate price corrections. This is why limited fresh deals are happening due to the hope of price revision by NMDC (the region’s sole Iron Ore supplier).

The current offers for Pellets have remained stable, despite the decline in Sponge Iron prices. However, with the expectation of a price reduction and weakened exports, it is anticipated that pellet prices will soften in the coming period.

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