C.G. Based Steel Units Lowered Iron Ore Sourcing from NMDC Sharply in Feb’17

Iron ore supply from NMDC’s Bailadila mines in Chhattisgarh has fallen considerably in Feb’17. According to railway movement data maintained with SteelMint, NMDC Chhattisgarh supplied only 6 rakes in Feb’17 (till 16 Feb’17) unlike 64 rakes in Jan’17.

It is to be noted that C.G. based sponge units contribute nearly 12% share in iron ore dispatches from NMDC’s Bailadila mines in Chhattisgarh. So far in this fiscal (till Jan’17), Chhattisgarh based units have procured 2.16 MnT iron ore from NMDC (C.G.).

In discussion with trade sources, SteelMint learned that state based sponge units are preferring pellets over NMDC’s iron ore. “Non viability of NMDC iron ore and easy market availability of Pellet Sponge (P-DRI) compared to Sponge iron (C-DRI) reduced our iron ore procurement” said a Raipur based sponge manufacturer of 300 TPD capacity.

“NMDC iron ore was not viable a week ago but since in last one week C-DRI price increased by INR 1,000/MT, lifting of iron ore has resumed” said a Bhilai based sponge manufacturer of 400 TPD capacity.

NMDC had raised iron ore prices up to 7% (INR 185/MT) M-o-M for Feb’17 deliveries over increase in global iron ore prices. In the month of Jan’17, the miner had hiked prices up to INR 140/MT M-o-M.

On the other side, Odisha based merchant miners did not revise iron ore prices in Feb’17.

It was also noticed during discussion with market participant that railway has recent revised NAL’s capacity from 63 MT to 78 MT per wagon. It will increase per rake quantity from 3,850 MT earlier to 4,500 (approx). Although, sources shared that this revision is temporary and will remain valid till 31 Mar’17.

Its expected that iron ore supply to C.G. based units will normalize in the coming term as global scrap prices have increased by USD 40/MT and domestic sponge prices by INR 1,000/MT W-o-W.

Iron ore sourcing of outside Chhattisgarh based units has not noticed any major change. Procurement of other major consignees in Feb’17* remained as follows – Vizag Steel – 87 rakes, JSW Steel Dolvi – 39 rakes and KIOCL – 28 rakes. In Feb’17*, 69 rakes were loaded from NMDC (C.G.) for export purpose.

Note:*indicates data updated till 16 Feb’17