Pellet Prices In India Changed After A Significant Rally

The Indian government’s removal of export duties on pellets and other commodities led to a significant increase in offers from Indian pellet producers, with prices surging by Rs 1,500-2,000/ton from the third week of November 2022.

Iron pellet prices, a key ingredient to produce sponge iron (DRI), have fluctuated in the current week with a marginal change of Rs 100-200/ ton. 

With the resumption of exports, the selling pressure on pellet producers has decreased and this has led to a constant surge in domestic offers in the last two months.

Slow Demand

Major producers in central India, Raipur, have reported limited inquiries on their floated offers of pellets at Rs 10,200-10,300/ton ex-works. Similar inquiries have been received from the eastern region, where producers in Durgapur are offering pellets at around Rs 9,600-9,800/ton ex-works.

Declined steel prices have resulted in limited trades in pellets. In addition, the buyers in Central India have stated that they are waiting for NMDC’s iron ore price declaration before taking positions for pellets. Additionally, a sufficient stock with them has resulted in limited fresh bookings for pellets.

Steel Price Decline

Steel prices in India have declined by Rs 1,500-2,000/ ton in the last 10 days, and sponge iron prices in central and eastern India’s markets in Raipur and Durgapur fell by Rs 1,000-1,200/ton. This has influenced steel makers to keep raw material (pellet) purchases limited.

As per market reports, India’s current pellet production capacity is about 120-125 million tons. Out of which the country’s recent production was about 70-75 million tons. Roughly 10-15% of the total produced pellets in India were exported in 2021.

Future Prospects

The iron ore miners in India are likely to decide on prices in the beginning of February 2023. Accordingly, the domestic pellet and steel market will react.

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