Photo by: Bloomberg
KOLKATA (miningweekly.com) - Global and Indian iron-ore prices are moving in opposite directions significantly changing the dynamics of the local markets and making India a net importer.
Indian export offers for high-grade iron-ore fines with an iron content of 63.5% and above, have been steadily falling over the past months from a range of $97/t to $98/t in July to between $94/t and $95/t and to a low of between $83/t and $84/t, with the market expecting offers to reach the $80/t mark in the absence of any significant buying interest from Chinese steel mills.
At the same time, the country’s largest miner, NMDC, has kept prices unchanged for the past three months at $75/t for high-grade lumps and $52/t for fines, as per a company announcement for September shipments, despite falling international prices.
Leading miner-exporters said that the current level of export offers made overseas shipments of ore unremunerative after the incidence of a 30% export tax, a 15% increase in railway freight charges and the impending hike in royalty rates from 10% to 15%.
However, miner-exporters said that despite overseas shipments falling, this did not result in any surplus in the domestic markets; on the contrary shortages were emerging.
Local steel mills were not equipped to feed fines to the blast furnaces and the production of high-grade lumps, on which they were dependent, was falling as mines that had closed down on claims of illegal mining were slow in coming back into operation, even after courts have cleared them to resume operations.
“During the first quarter of 2014/15, India exported 2.25-million tonnes of iron-ore compared to 3.10-million tonnes in the corresponding period of the previous year. Going by these estimates we expect total exports to fall to a single-digit figure of around eight- to nine-million tonnes by close of the current fiscal,” Federation of Indian Mineral Industries (FIMI) president Hukum Chand Daga said.
“With delays in obtaining clearances, renewal of mining licences deemed illegal by the courts is still to be formalised and several mines were slow in getting back to production; hence, imports are likely to reach 15-million tonnes during the current year, making India a net importer of the raw material,” he said.
Imports increased from 1.9-million tonnes in 2010/11 to three-million tonnes in 2012/13 but fell sharply to 400 000 t in 2013/14 on improved supplies.
However, supply-side pressures would be aggravated by the closure of 12 operational mines in the eastern Indian province of Jharkhand earlier this month, though FIMI officials said the exact impact of the closure was yet to be ascertained.