India: JSW Steel reduces Domestic Iron Ore Sourcing; increases Import

JSW Steel, India’s largest private steelmaker with an annual capacity of 14.3 MnT, has been struggling with sourcing Iron ore amid mining restrictions in Karnataka, Odisha & Jharkhand. It is noticed that company has reduced its purchases in September 2014 from domestic market  owing to various reasons (mentioned below). Total purchases have been down by 40% in Sep’14 against Aug’14.

Along with this, JSW’s imports have increased significantly from last quarter.

1. Royalty on Iron ore was increased by 5% in the month of Sep’14, making domestic ore dearer by INR 150-300/MT
2. Global Iron ore prices have corrected to USD 77-78/MT CFR China, hitting 5-year low
3. Reduction in Iron ore quantity offered in Karnataka’s e-auction
4. 50:50 rule in Odisha has restricted most of the miners in the state to make outside state sales
5. Mines running under second deemed renewal suspended in Jharkhand
6. JSW expecting 0.7 MnT of imported Iron ore till 15 Oct, 2014

JSW’s Iron Ore Purchases in Q2 FY15 

Qty in MnT
Source: SteelMint Research

1 MT of crude steel requires around 1.6 MT of Iron ore.