Port Congestion a Major Issue for Iron Ore & Coal Import – Tata Sponge

Sponge iron manufacturers have been struggling hard with souring of Iron ore and coal. Above that falling Scrap prices in the global market and low steel demand in the domestic market have forced many units to scale down their production.

Though, global Iron ore prices have fallen, it has not benefited Indian steel mills, as capacity to discharge is much lower than quantum of imports happening.

Steel mills have to wait for weeks & months to get their cargo cleared. Some mills are forced to go for imports at different and efficient port by paying high logistical costs.

India’s one of the largest coal based Sponge iron manufacturers, Tata Sponge’s MD, Mr. Deshpande in conversation with SteelMint stated its views on the present scenario.

How is Sponge Iron Situation in India?

Iron ore situation is really bad in the domestic market. First of all, it is not available in the domestic market and whatever is available is of inferior quality and high price. People have perception that Iron ore & coal prices have corrected in the global market, so it should also impact Indian Sponge iron prices. 

But, it is not that way, by the time imported cargo reaches to plant site, cost goes high owing to factors like port congestion and unavailability of railway rakes.

Sponge iron prices have corrected a bit. Current offers are at around INR 21,000/MT ex-works. However, there is limited scope of price correction.

Imported Iron Ore

Though, Iron ore prices have come down in the global market, it has not helped Indian manufacturers owing to logistical and infrastructural bottlenecks. It is seen that Paradip port is over congested and Haldia followed suit. Also, there are port problems in South Africa, which is currently a preferred source for imports of Iron lump.

On similar lines, it is difficult to transport imported coal owing to unavailability of rakes. We have to use trucks that are costlier by at least USD 15/MT (INR 900/MT).

Mining Issues in Odisha

There are several issues with mining in Odisha. The state government has not been pro-active in getting clearances for mines, which have been closed. It seems, it will take time and we do not expect quick recovery in near-term.

India is the largest producer of Sponge iron (DRI) in the world with an annual production of about 24-25 MnT in comparison with an installed capacity of 45 MnT.

Current Prices (INR/MT)