Indian Iron Ore Imports likely to cross 1.3 MnT in Jul’14

• Intense Iron ore supply crisis prevailing in domestic market
• Sharp fall in global Iron ore prices
• Depreciation in INR against USD
• Import duties remain unchanged post budget
• Delay in granting of renewal licenses to miners by the Supreme Court and ambiguity over 50: 50 rule

India, world’s 3^rd largest Iron ore exporter in FY10, is now in a plight that it is to import Iron ore. Starved of Iron ore, Indian steel giants have inclined towards imports to maintain optimum capacity utilization.

The interim mining ban imposed on 26 Iron & Manganese ore mines in Odisha and 50:50 rule have overshadowed Iron ore production in domestic market. So, the companies are left with no other option but to import the raw material.

Though, the global Iron ore prices have improved slightly over last month but still to retain the apt level, which will also facilitate imports.

Finance Minister, Arun Jaitley in Indian Union Budget 2014-15 has kept import duty on Iron ore & Pellets unchanged to facilitate raw material imports. Current duty on imports of Iron ore & Pellets is 2.5%.

Also, Indian currency hits 6-week low of 60.45 on 18 Jul, 2014 and dealers expect the rupee to trade in a tight range, which is likely to augment imports.

As JSW Steel is targeting to elevate its crude steel production to 12.9 MnT in FY15, so it’s reliant on imports thus have decided to import half a MnT of high grade Iron ore every month to maintain capacity utilization at the optimum level. Since the beginning of this month till 17 Jul, 2014 JSW Steel has imported  about 0.2 MnT Iron ore from South Africa through Krishnapatnam port. 

Apart from JSW Steel, another steel producer Tata has imported around 0.2 MnT  from April, 2014 till mid of this month. 

 Qty in MT
* Vessel expected
# Vessel at anchorage
Provisional data
Source: SteelMint Research, Port site