Major merchant miners in Odisha who have been continuing with the same price since 2nd half of Aug’17 may consider increasing iron ore prices for Dec’17.
Factors that may result in hike in Odisha iron ore prices:
1. Restricted iron ore availability : Iron ore supply from India’s largest iron ore producing state – Odisha may come under pressure if supplies get interrupted from Serajuddin Mines. As per market sources report, EC renewal of Serajuddin Mines’ lease is due and it is to expire on 02 Dec’17. In the latest update received, the renewal for the same is still pending and this may result in fall in iron ore supply from the mine if the lease renewal takes considerable time. It may result in interim shortage of iron ore supply from the miner’s end.
Also it was learnt that one of major merchant miner KJS Ahluwalia has kept its sales closed as of now. The miner has recorded production of 4.06 MnT during Apr-Sept’17 and it has EC limit of 5.6 MnT pa. Production of other major miner – Indrani Patnaik mines was recorded at 2.58 MnT during Apr-Sept’17 and it has EC limit of 4 MnT pa. Restricted iron ore supply may result in hike in prices.
2. Transportation issues owing to less rake availability : According to miners the diversion of rake for transport of Coal to thermal power plants is one of the key reasons behind the decline in rake availability of iron ore. Local traders believe this to be the key reason behind the Railway’s giving preference to coal since the last two months. Iron ore dispatches from Odisha’s merchant mines have fallen for the 3rd consecutive month in Oct’17. State based merchant miners supplied 5.39 MnT iron ore in Oct’17 in domestic market compared to 5.89 MnT in Sept’17.
3. Hike in Sponge iron Prices : C-DRI prices in eastern India (Rourkela and Durgapur)have increased by around INR 1,000/MT in a month’s time amid low production levels and improved demand. C-DRI (78 FeM) prices have increased today by INR 200-300/MT D-o-D and are assessed at INR 18,600-18,800/MT (delivered).
Odisha is India’s largest iron ore producing state and contributes for nearly 50% share of country’s iron ore production.
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