With Chinese demand of iron ore slowing down along with prices, Australian and Brazilian miners are looking to set their presence in Indian market.
We conducted a survey among medium and large steel manufactures to understand the dynamics of current market and viability of imports on iron ore to India.
Current Situation
Odisha: State government frames new new mining policy for renewal of mines, which states that miner has to add value or use ore for captive use. Ore can not be traded or exported without any value addition.
Some miners have started coming up with pellet, beneficiation or steel plants in the state. Other miners are looking to acquire or merge with steel plants. This will certainly restrict supply of iron ore in the market and plants without captive mines will suffer.
Karnataka: The Supreme Court lifts ban on 18 'A' grade mines which were shut for more than a year over illegal mining issue. It will take at least one year for supply to stabilize in Karnataka say market participants.
On the other hand people have slowed down their expansion plans amid uncertainty of supply of iron ore in the state.
Goa: The Supreme Court bans all kind of mining and transportation of iron ore in the state on state committee's report of serious illegal mining in the state. Though it will not impact domestic market as iron ore available in Goa is of inferior quality and majorly exported to China.
Imports: With Indian government imposing restriction and planning to cap on iron ore mining in the country, supply might get critical in order to achieve 140 million tonnes production per annum in 2020.
Imports have certainly increased in the state and steel manufacturers can not neglect the option of importing iron ore, say an executive director at large steel plant. Also imports will put pressure on domestic iron ore prices which is predominantly run by private miners.
Current offers from South Africa stand at around $115-116/t CFR India for 64% Lumps, where as pellets are being offered at $130/t CFR India from Brazil.
With rupee gaining momentum (appreciated by almost 4% in last few weeks) against dollar, room for imports are ample specially for steel plants based on coastal region.
Industry Speaks
“Importing fines is not viable as slowing down exports of fines from India have already increased supply in domestic market. Manufacturers are more keen to buy iron ore lumps or pellets. If prices are competitive, we will not mind trying it as added source of raw material.” said an executive at a steel plant based in Odisha.
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