JSW Steel, India’s leading steelmaker, procures iron ore majorly from Odisha, Karnataka, Chhattisgarh, Jharkhand, Goa and via imports. It produced 12.63 MT crude steel in FY15.
JSW Steel’s iron ore sourcing rose by 6% Q-o-Q in Q2 FY16. In Q2 FY16, JSW procured 5 MnT of iron ore. Out of the total sourced quantity, the largest share (83%) was from Karnataka e-auctions, followed by procurement from NMDC C.G. mines (15%). The remaining quantity of iron ore was brought from imports.
Apparently, the major reason for increase in procurement is that the company aims to raise its crude steel production to 13.4 MnT in FY16, up by 8% Y-o-Y. In order to compensate with iron ore imports, the company increased its domestic purchases.
Unlike Q1 FY16, JSW Steel has increased it iron ore purchases, in Q2 FY16, in order to attain its crude steel production target.
In Sept’15, the steelmaker procured 1.1. MnT iron ore Karnataka e-auctions, 0.16 MnT from Chhattisgarh, and procurement from Odisha and Jharkhand as well as imports remained nill.
Qty in MnT
Provisional Data
Source: SteelMint,Customs, DMG, Railways
The steel maker imported 0.6 MnT of iron in Q1 FY16. Later in Q2 FY16, due to falling global prices and cheaper availability of iron ore in domestic market, the steel maker shifted its interest towards domestic ore. Iron ore purchase cost remained more profitable from domestic rather than imported.
Iron ore purchases from Karnataka also increased 5% Q-o-Q in FY16. This was due to iron ore offered in the Karnakata e-auctions (by NMDC and private miners) was at much lesser base prices as compared to other states. Also, purchases from Goa-e-auction remained nill in both the quarters of FY16.
Procurement from NMDC Chhattisgarh mines significantly increased. It was 0.18 MnT in Q1 and 0.72 MnT in Q2 FY16. Purchases from Odisha and Jharkhand continued to remain nill.
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