Indian steel makers seek offers from miners and global traders for Iron ore. Market participants are anticipating few imported parcels to land sometime in the month of June
After the Supreme Court’s suspension order of 26 Odisha mines running under deemed renewal, has certainly created a supply gap in the market. Considering 26 mines, which include Iron ore and Manganese output, loss of Iron Ore will be at around 35-36 MnT. So far, Odisha is the largest Iron Ore producer in the country with an annual output of around 72 MnT.
Merchant’s loss is estimated to be around 19 MnT and rest 16-17 MnT from Tata and SAIL. There is no clarity if state government will allow to use stockpile at mines head, which should be around 7-8 MnT (excluding Tata and SAIL).
Indian steel makers have started looking for imports of Iron ore. Speaking to a miller based in Western Coast, we learned that current offers from S. Africa for Lumps of 64% grade are in the range of USD 117-118/MT CFR West Coast India. “One can expect some import cargoes in June end,” he said.
“We are seeking import of Iron ore for the reason that situation in Odisha is not clear. If state government allows sale of inventories and if export slides from India, we do not have to import much,” said steel maker based in Western Coast of India.
He also added that Indian steel makers will prefer Lumps or Pellets over Fines, if they are going for imports.
“We will not be surprised if some imports start taking place, but it will not sustain for a long time as we are anticipating that state government will take steps to stabilize things,” said another steel miller based in Eastern Region of India.
Landed Cost of Imports Vs. Landed Cost of Domestic Iron Ore
Considering a steel mill based in Western coast, current cost of procuring Iron ore Lumps (6-30mm) of grade 65% from NMDC would cost around INR 8,000-8,100/MT ($135-137/MT) delivered to plant site. Whereas imported cargo of almost same grade and size would cost them INR 7,900-8,000/MT (USD 134-136/MT).
Imported cargo will take 20-25 days where as domestic cargo will take 15-20 days to get delivery at the plant site.
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