India: Exports lift Godawari pellet sales

Godawari Power and Ispat Ltd (GPIL) posted a 31.5% q-o-q gain in pellet sales volume on a standalone basis in the first quarter FY21 (Apr-June'20), driven by overseas sales.

The company sold 380,301 t of pellets in Q1 FY21 vs 289,189 t in Q4 FY'20 on a standalone basis. Its subsidiary, Ardent, sold 180,116 t pellets in Q1 FY21 as compared to 204,255 m t in Q4 FY20.

Pellet production gained by 6% q-o-q in Q1 FY21 on a consolidated basis at 649,229 t. Iron ore production from captive mines fell by 29% q-o-q in Q1 FY21 at 321,807 t.

Lower domestic demand due to lockdown was mitigated by higher export sales, with Godawari exporting 95% of pellet production on a standalone basis in this period.

Chinese demand for Indian pellet has remained strong through the year as iron ore consumption has been whetted by a robust pick-up in steel output after the lockdown in China was lifted in March. But, Godawari is stepping up sales in the domestic market as demand has increased after the nationwide lockdown in India was lifted in May.

The company has pellet exports booking till Sep '20. Currently, the bookings for the local market are at around 40,000t at prices of INR 6,800-7,000/t. The company recently sold export cargoes for $120/t and $129/t for Sep'20 shipment.

Godawari had shut its steelmaking operations from 24 March-9 April during the nationwide lockdown to control coronavirus infections. Production has been normal since the third week of May.

Focus on DRI pellet

Godawari currently exports Fe 63.5% and 1.5% alumina grade pellet to China which typically fetches a low-alumina premium of about $5-6/t.

The company is expanding output of 67% DRI grade pellet, for exports and self consumption in manufacturing high-grade billet. Godawari is operating a 1 mtpa beneficiation plant which would be used to produce high-grade raw material for the 67% pellet.

But demand for DRI pellet is currently muted globally as iron ore demand in Europe and the MENA region remains subdued.

Godawari may export high-grade pellet from Q3 of this fiscal. The company expects the 67% Fe grade pellet to sell at a premium of $ 15-20/t to the typical 64% Fe grade Indian pellet.