Pellet prices to correct by 30% from the pre-export duty levels: ICRA

Jun 29, 2022, 09.45 AM
DealMoney News Service

Pellet prices to correct by 30% from the pre-export duty levels and consequently, the contribution margins of merchant pellet players are expected to decline roughly by Rs. 1,000 per MT (metric tonne) from preduty levels, according to ICRA.

The Government of India slapped a hefty 45% levy (from nil) on the export of iron ore pellets from May 21, 2022.The application of this high export tariff has reduced a merchant exporter's net effective realisation, rendering pellet exports unviable.

Jayanta Roy, Senior Vice-President & Group Head, Corporate Sector Ratings, ICRA said: “India exported more than 11 million tonnes (mt) of pellets in FY2022, accounting for almost
15% of its overall pellet production. With exports becoming unviable, industry asset utilisation will be adversely impacted and domestic pellet prices would come under pressure, going forward. Our calculations suggest a 10% drop in domestic pellet production in FY2023 as the domestic market is going through a period of muted demand
growth and is unlikely to fully absorb the pellet supplies meant for the export market.”