India’s iron ore production in FY19 was around 208-210 million tons, according to preliminary estimates. However, imports surged 157 percent between April and December, at 11-million tons, as per the latest inward shipment data.
The impact of the demand-supply dynamics is being reflected in several private miners claiming mounting unsold stocks.
For example, in Karnataka, miners have reported to be saddled with stocks of fivemillion tons as of last month, according to industry sources.
The increased domestic production of iron-ore is significant in view of the fact that iron-ore mines in Goa have remained closed since March 2018, on orders of the Supreme Court and Odisha, which accounts for half of country’s production, with a marginal rise to 101-million tons from 98-millions ton during fiscal 2017-18.
Also some large domestic steel mills are preferring imports resulting in unsold stocks at pitheads.
Mills maintain that the surge in imports was largely owing to varying grades of ironore, depending on local geographies, and high logistical costs in transportation from pitheads to steel mill location.
Further, a low import duty of 2.5 percent makes imported iron-ore cost competitive and, hence, the trend to use imported feedstock by many of the large steel mills, particularly in coastal locations.
Metal firms stare at uncertainty on ore front
Metal companies, especially primary steel manufacturers, are facing an uncertain future on sourcing of iron ore, the key raw material, with leases of about 288 mines, including iron ore, bauxite, limestone and manganese, set to get cancelled in March next year.
These mines will be auctioned as per the Mining and Minerals Regulation (Development) Act. They are currently owned by merchant miners without any forward integration with metal production.
In 2015, the government had mooted a competitive auction process to weed out corruption and clamp down on discretionary allotment of mines. Merchant mine owners were given a five-year support before their mines are put on auction. Following this, leases of private mine owners will expire on March, 2020.
Denne historien er fra May 2019-utgaven av Steel Insights.
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Denne historien er fra May 2019-utgaven av Steel Insights.
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