India’s leading steel producer, JSW Steel requires about 22 MnT Iron ore to operate its steel plants at maximum capacity. The company produced 12.2 MnT steel in FY14 and targets to reach 12.9 MnT in FY15.
JSW is expecting 169,585 MT (0.17 MnT) Iron ore vessel at Krishnapatnam port (Andhra Pradesh) on 06 Jul, 2014; vessel name is Eurydice D. For the first time, the company is importing South African Iron ore fines of Fe 63%+ from Kumba mines of Anglo American. Delivery time from South Africa is about 15-18 days.
Iron ore fines have been booked at around USD 95/MT CFR Krishnapatnam port. Iron ore import duty is 2.5%. The raw material may be used by JSW’s Salem (Tamil Nadu) Steel plant having 1 MnT pa capacity or Vijaynagar plant having 10 MnT pa steel making capacity.
Total cost of transporting Iron ore fines from Krishnapatnam port to Salem Steel plant would cost at around INR 900-1,000/MT. And, Krishnapatnam port to Vijaynagar plant would cost around INR 1,000-1,100/MT.
In the second half of July, JSW Steel is anticipating Iron ore vessel from Canada, which is likely to carry more than 0.1 MnT Iron ore to Krishnapatnam port. Delivery from Canada takes not less than a month.
Imports option cropped up after the Supreme Court ordered suspension of mining operations for 10 merchant mines in Odisha, which produced 19.1 MnT Iron ore in FY14. To add on, Karnataka mining is improving at a slow pace and Goa may resume operations Q3 FY15 onward.
In Goa’s 3rd e-auction, the company has purchased 11,484 MT Iron ore fines (8,484 MT of Fe 59 & 3,000 MT of Fe 60) on 12 May, 2014. The floor and bid prices were at INR 1,830/MT (basic) and INR 1,970/MT (basic) respectively.
Appreciated INR against USD and weakening Chinese spot Iron ore fines prices supported imports. Imports for JSW are need based and an option for survival because of Iron ore shortfall in domestic market. It is not economical to import as of now owing to lower procurement cost in domestic market.
In FY14, JSW purchased 17.2 MnT Iron ore from Karnataka e-auctions. 1.8 MnT Iron ore was purchased from NMDC Bailadila mines in Chhattisgarh through railway movement in Jan-May, 2014. From Odisha based mines, 1.6 MnT Iron ore was procured in Jan-May, 2014.
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