JSW Steel’s Iron Ore Sourcing in May’16

JSW Steel has recently upgraded its installed crude steel capacity to 18 MnT pa. The steel giant aims to produce 15.75 MnT crude steel in FY17 for which it will be in need of nearly 27 MnT ore. Therefore apart from present sourcing options the steel maker is also looking forward for some more options to augment iron ore supply.

The steel maker is in talks with Sandur Manganese & Iron Ore Mines (SMIORE) for long term iron ore supply agreement. Also the steel maker is expected to actively participate in the block auctions in Karnataka in which 14 ‘C’ category mines would be put up for auction in Jul’16. In May’16, the steel giant procured 1.84 MnT iron ore from domestic market as well as through imports.

Considering present lower iron ore prices by INR 50-200/MT, JSW Steel’s procurement will increase from Odisha and NMDC in Jun’16.

Volatility in global iron ore prices drives down imports in May’16

Unlike Apr’16, only single iron ore import shipment of JSW Steel was observed in May’16. The company imported a vessel of 160,000 MT iron ore from Brazil at Jaigarh port towards the beginning of May’16. In Apr’16, JSW Steel imported 0.47 MnT iron ore via three shipments.

Global iron ore prices exhibited a wavering pattern last month. Index for Fe 62% fines were assessed at USD 63/MT, CFR China towards the beginning of May’16 which fell to USD 54/MT by mid of the month and then again increased by USD 2-3/MT. Towards the end of the month prices were seen at levels of USD 49-50/MT.

Sourced 1.32 MnT iron ore from Karnataka e-auctions

The steel maker has raised purchases from Karnataka e-auctions in May’16. The company sourced 1.32 MnT iron ore in May’16 against 1.28 MnT in Apr’16. The steel maker sourced fines (Fe 60.5%) at bid price of INR 1,490/MT and lump (Fe 62.5%) at bid price of INR 1,876/MT. (Basic prices and grade mentioned are weighted average).

Procured 62 rakes from Odisha merchant mines

JSW Steel bought 62 rakes of iron ore last month from Odisha based merchant mines (primarily Rungta Mines & Serajuddin Mines). Fines prices in Odisha remained around INR 1,300/MT (ex-mines, incld Royalty, DMF & NMET). As per market sources, buyers received discount of around INR 100-200/MT on bulk purchases). JSW Steel procures material from Odisha mines via railway movement to Dhamra port siding (freight is around INR 700/MT) and then moves to Mumbai port for its Dolvi plant via coastal movement.

32 rakes of iron ore procured from NMDC (Chhattisgarh)

The steel giant’s sourcing from NMDC’s Bailadila mines has fallen marginally. The steel maker sourced 32 rakes of iron ore in May’16 for its Dolvi plant compared to 41 rakes in Apr’16. In May’16, NMDC had cut fines prices by INR 200/MT to INR 1,660/MT (FoR prices, Royalty, DMF & other taxes extra).

Sourcing of JSW Steel from Goa remained nil as no e-auction was conducted in May’16.

JSW Steel’s iron ore sourcing- May’16 vs Apr’16

Provisional data
Source: SteelMint Research, Customs, Karnataka DMG, Railways