JSW Steel’s Iron Ore Sourcing Up by 35% in Q1 FY17

JSW Steel sourced 6.3 MnT iron ore in Q1 FY17 against 4.7 MnT in same period last fiscal.

India’s largest private sector steel making company – JSW Steel has increased its iron ore sourcing in line with increase in its installed crude steel capacity. The steel maker has upgraded its installed crude steel capacity from 14.3 MnT pa to 18 MnT pa. Following which the steel biggy has raised its iron ore procurement. It sourced 6.3 MnT iron ore in Q1 FY17 against 4.7 MnT iron ore in Q1 FY16.

In Q1 FY16, its sourcing pattern was as follows : Karnataka (3.9 MnT), imports (0.6 MnT) and Chhattisgarh (0.2 MnT).

However in Q1 FY17 the steel maker has not only raised its sourcing from particulars mentioned above but also started sourcing from Odisha merchant miners on improved viability over reduced prices. In Q1 FY17, its share of iron ore sourcing pattern was as follows: Karnataka (4.2 MnT), Odisha (1 MnT), imports (0.8 MnT) and Chhattisgarh (0.3 MnT).

Comparing on quarterly basis, the steel maker’s sourcing is down by 5%. The steel giant had procured 6.6 MnT iron ore in Q4 FY16. Its sourcing from Odisha moved up five fold from 0.2 MnT in Q4 FY16 to 1 MnT in Q1 FY17. At current offers (Odisha fines at INR 1,100-1,300/MT ex-mines incld royalty, DMF & NMET) landed cost of fines to its Dolvi plant is around INR 2,900-3,000/MT.

JSW Vijayanagar and Salem began sourcing from Odisha in Q1 FY17 – In Q1 FY17, JSW Steel was observed sourcing iron ore from Odisha for its Vijayanagar and Salem plants as well. JSW Steel’s Vijayanagar plant procured 31 rakes from Odisha in May’16 and 30 rakes in Jun’16. The landed cost of Odisha fines to Vijayanagar plant is around INR 3,900-4,000/MT.

While for its Salem plant, the steel major sourced 26 rakes in Jun’16 which was nil in May’16.

Procurement from NMDC (Chhattisgarh) fell consecutively – JSW Steel, Dolvi narrowed down its procurement from NMDC Chhattisgarh with each successive month of Q1 FY17. It had sourced 32 rakes from NMDC (Chhattisgarh) in May’16 which remained nil in Jun’16. Instead it sourced 46 rakes from Odisha in Jun’16 against 31 rakes in May’16.

Prime reason behind reduction in sourcing from NMDC (C.G.) was comparatively higher (costlier by INR 600-700/MT) against cost of landed material from Odisha.

Imports from Brazil intact – JSW Steel has been seen importing Carajas fines from Brazil in last three months that would be used up at its Dolvi plant.

JSW Steel’s iron ore sourcing in Q1 FY17

Provisional data
Source: SteelMint Research, Customs, Karnataka DMG, Railways