As per market participants and iron ore movement data maintained with us iron ore dispatches have remained quite good in Jul’16. Low sponge iron production and subdued finish steel demand and prices will keep iron ore miners in dilemma.
Therefore amid firm sponge iron market and stable iron ore movement, Aug’16 iron ore prices are not certain.
Key highlights that will govern iron ore prices for Aug’16-
1. JSW Steel increases iron ore sourcing from NMDC (C.G.) significantly in Jul’16: Contradicting to Jun’16 when JSW Steel did not source any rake from NMDC (C.G.), it has considerably raised its souring in Jul’16. The steel maker procured 55 rakes for its Dolvi plant in Jul’16*. However its sourcing from Odisha merchant mines remained majorly stable on monthly premises.
2. Chhattisgarh based plants sourcing from NMDC remains stable: C.G. based sponge units procured 47 rakes of iron ore from NMDC Chhattisgarh mines in Jul’16*. Last month they procured 56 rakes from NMDC (C.G.).
3. RINL procures less iron ore from NMDC (C.G.) in Jul’16: In Jun’16 Vizag Steel procured 147 rakes of iron ore which fell and stood at 94 rakes in Jul’16*.
4. Iron ore sourcing of C.G. based plants from Odisha falls in Jul’16: 230 rakes of iron ore were sourced by C.G. based sponge units in Jun’16 which dropped and fell to 177 rakes in Jul’16*.
5. Sponge iron prices in central & eastern India increase on low production: Towards the beginning of Jul’16, sponge iron prices witnessed stability with minor corrections. But towards the end of the month prices moved up sharply on low production. Presently in Raipur C-DRI (82 FeM, DR-CLO) are seen at INR 13,300/MT (ex-works). And offers for C-DRI (78 FeM) in Durgapur are assesed at INR 11,900/MT (ex-works).
Pellet sponge prices are currently seen at following levels: Durgapur-INR 10,900/MT (ex-works) for 78 FeM and INR 11,300/MT (ex-works) in Raipur for 80 FeM.
6. Global iron ore prices up by USD 6/MT in Jul’16: Monthly average global iron ore fines (Fe 62%) prices moved up from USD 51/MT, CFR China in Jun’16 to USD 57/MT, CFR China in Jul’16. Prices observed a wavering pattern throughout the month but in the last week of the month, prices gained momentum after few Chinese domestic iron ore miners requested for anti-dumping investigation on growing low cost iron ore supplies from Australia and Brazil.
*data updated till 28 Jul’16
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