1. Most Discussed
  2. Gainers & Losers
SDL 0.5¢

India heading for Iron Ore crisis due to mining bans

  1. pikapika

    1,624 Posts.

    29 Jan 2015

    India heading for Iron Ore crisis due to mining bans: ASSOCHA

    In the wake of bans and restrictions imposed on iron ore mining in Odisha, Jharkhand and Karnataka, India’s steel industry is likely to face unprecedented crisis due to extreme shortage of iron ore and cheaper i..

    30 Jan 2015

    MUMBAI(Commodity Online): In the wake of bans and restrictions imposed on iron ore mining in Odisha, Jharkhand and Karnataka, India’s steel industry is likely to face unprecedented crisis due to extreme shortage of iron ore and cheaper imports from China and Russia.

    In a note submitted to the government today, apex industry body ASSOCHAM has suggested for an urgent intervention to correct artificially inflated rate of iron ore in the domestic market by the non-captive iron ore miners.
    The chamber secretary general, D.S. Rawat lamented that as against the international norm of efficient steel making, the Indian steel industries have no captive mines and fully dependent on the domestic merchant miners. Both private and PSU in the states of Chhattisgarh, Odisha, Jharkhand, etc. have been paying very high cost for Iron Ore ranging from US$ 96-105/ MT (landed cost) resulting in high production cost of Steel $ 450 -500 / MT rendering them less competitive in the international market as well as in the domestic market because of cheaper Imports from China/ Russia/ other countries.

    As a result of such high level of Iron ore prices maintained by domestic producers coupled with crash in international iron ore prices and dumping by Chinese and Russian Steel producers, domestic steel producers are left with no option but to resort to import of iron ore in order to maintain sustainability in the current market scenario and stay afloat.
    While in India, steel production has gone up from 65.84 MT in 2009-10 to 91 MT in 2014-15, the iron ore production has gone down from 218.55 MT in 2009-10 to 138 MT in 2014-15, adds the ASSOCHAM.

    The low Iron ore production is reducing year upon year and is leading to a situation where the Iron ore requirement is surpassing the restricted production currently being witnessed in India. While few de-bottlenecking steps have been taken recently by the government, the same has yet to produce results. During the current year Indian Steel industry has already imported 8.5 Mio T of Iron ore (Apr-Dec’14) and the total Iron ore imports likely to cross 12-13 Mio T during FY 2013-14.

    Due to various restrictions imposed on iron ore producers in various states and closure of mines happening for various reasons, there is mismatch in demand and supply. As a result, few other mines. Which are allowed operation is operating with huge demand from the Steel/ Sponge Iron/ Pellet producers having no captive mines.

    In order to continue their operation, the plants are forced to offtake Iron ore at a price determined and dictated by these producers. This has resulted in anomalous situation whereby while the world over all commodity prices including Iron ore prices are falling, domestic Iron ore prices are sustaining at a very high level.

    The International prices have dropped by almost 50% from its peak level of US$ 135.88/ DMT CFR China in Nov’13 to the current level of US$ 63-64/ DMT CFR. The JSM FOB price, which also follow Platts IODEX, have reduced by 41% from US$ 121.90/ DLT in Nov’13 to US$ 72.29/ DLT in Jan’15. However, during the same period the domestic Fines price has increased by 17% from Rs. 2610/ WMT to Rs. 3060/ WMT in Jan’15 on ex-mines basis, the chamber said.

    Steel industry continues to be sluggish for the past 2-3 years with there being hardly any chance of recovery in the near term. The price of Hot Rolled Coil (HRC) has crashed in the International market during the past 1 year from a level of US$ 570 to the current level of US$ 440, a drop of 23%. With the Chinese economy slowing down and Infrastructure/ Construction activities waning in China, it has doubled its export of Steel and is dumping Steel in the Indian market and elsewhere in a big way.

    http://www.commodityonline.com/news...ue-to-mining-bans-assocham-61477-3-61478.html

DISCLAIMER:
Before making any financial decisions based on what you read, always consult an advisor or expert.

The HotCopper website is operated by Report Card Pty Ltd. Any information posted on the website has been prepared without taking into account your objectives, financial situation or needs and as such, you should before acting on the information or advice, consider the appropriateness of the information or advice in relation to your objectives, financial situation or needs. Please be aware that any information posted on this site should not be considered to be financial product advice.

From time to time comments aimed at manipulating other investors may appear on these forums. Posters may post overly optimistic or pessimistic comments on particular stocks, in an attempt to influence other investors. It is not possible for management to moderate all posts so some misleading and inaccurate posts may still appear on these forums. If you do have serious concerns with a post or posts you should report a Terms of Use Violation (TOU) on the link above. Unless specifically stated persons posting on this site are NOT investment advisors and do NOT hold the necessary licence, or have any formal training, to give investment advice.

Top

Thank you for visiting HotCopper

We have detected that you are running ad blocking software.


HotCopper relies on revenue generated from advertisers. Kindly disable your ad blocking software to return to the HotCopper website.

I understand, I have disabled my ad blocker. Let me in!

Need help? Click here for support.