India: Odisha based Miners keep Iron Ore Prices Unchanged despite Short Supply

• Iron ore prices remain unchanged for Mid-July despite short supply
• Some miners wait for clarity on 50:50 rule in Odisha
• Miners may adopt differential pricing policy for state based and outside state units
• Imports to touch 1 MnT till July, 2014

Rungta Mines & Essel Mining, Odisha’s largest merchant miners have maintain Iron ore prices for second half of July, 2014 despite short supply in domestic market.

Odisha based miners keep their Iron ore offers unchanged for rest of the month owing to falling Sponge iron prices and availability of Pellets in the market. Market participants mentioned that increasing consumption of Pellets has widened the gap between P-DRI & C-DRI.

“After the Supreme Court suspended mining operations in Odisha, it has become tough for us to get Iron ore lumps. There are hardly 6-8 mines operating. We have no other option but to run on Pellets,” said a Sponge iron manufacturer based in West Bengal.

On similar lines, Iron ore traders based in the state mentioned that there is hardly any option to get lumps from Odisha. Miners like Rungta, Essel, Serajuddin, Indrani Patnaik, NE, PT are either overbooked or not offering in the market.

“We are waiting to get more clarity on 50:50 rule and CEC report to be presented by 26-27 Jul, 2014. We will take a call on prices after that,” stated an official from one of the mines.

Current Offers

Grade: Fe 63%
Prices in INR/MT, including royalty
Prices are as per loaded to wagons
Source: SteelMint Research

Outside State Manufacturers fear Differential Pricing Policy by Miners

Steel & Sponge manufacturers based outside Odisha fear that miners may adopt differential pricing policy. As gazetted notification issued by the state government in the month of June, 2014 highlighted that merchant miners have to reserve 50% of their production for state based industries.

The state government will act as a nodal agency for assuring state based industries get the required quantity from merchant miners.

“There is a possibility of differential pricing as we have seen in Chrome ore, which is auctioned through Orissa Mining Corporation,” stated a steel manufacturer in Odisha.

Imports continue to rise

Looking at prolonged restrictions on mining activities in Odisha, steel manufacturers have started importing Iron ore from Africa & Australia. As per current data, total imports would be touching 1 MnT by this July.