India will import nearly 15 million tonnes of iron ore in 2015 as higher domestic prices amid a supply shortage push top steel makers to import more, said industry executives.JSW Steel Ltd, with the largest domestic capacity for steel among private firms, will import maximum ore at nearly 9 million tonnes, while Tata Steel Ltd is expected to import roughly 2 million tonnes.
“By the end of the fiscal, JSW would have imported almost 9 million tonnes out of the total 15 million tonnes expected to be imported into the country, a marked shift from last year’s one million tonne total imports,” said Seshagiri Rao, joint managing director and group chief financial officer of JSW Group, adding a domestic supply shortage of almost 10 million tonnes has led to higher domestic prices.
“This is making imports of iron ore for coast-based steel plants much more viable although for plants in the interior of the country, it is still unviable to import. Still, companies are importing, as there is no uniform availability.”
Tata Steel did not respond to an email seeking clarity on its imports; but representatives of an industry association tracking such data said its imports would be close to 2 million tonnes.In a statement on 30 December, T.V. Narendran, managing director of Tata Steel, India & South East Asia, had confirmed that the company would be a net importer of iron ore.
Narendran said in an email that the company was impacted by issues related to mining lease renewals which led to intermittent stoppage of mining operations leading to disruption in the end-use operations.Goutam Chakraborty, analyst with brokerage Emkay Global Financial Services, said the current price of 62% Fe grade iron ore is about Rs.4,000 per tonne in India; the same grade is available internationally at around Rs.3,500 per tonne. He added that the cost of iron ore is even higher in India in case of lumps and is close to Rs.4,200-4,500 per tonne for a 62% Fe grade.
Rao from JSW Steel added that while international prices have fallen almost 40% since the beginning of the fiscal, in India, prices have actually risen.Bloomberg data says the price of 62% Fe grade iron ore fines imported into China has fallen from $110.1 per tonne as on 1 April 2014 to $66.4 per tonne as on 25 December 2014, a fall of almost 40% so far this fiscal.
In contrast, ore price at e-auctions in India has risen from Rs.2,700 per tonne in April to Rs.3,140 per tonne in November. State-owned miner NMDC Ltd cut prices in December for the first time in 2014, said Chakraborty of Emkay in a 2 January report. Data on the quantum of the price cut was not available.A senior NMDC executive said the price discovered via e-auction has not fallen, as there is demand at higher prices and buyers seem to have the capacity to absorb these prices. “Why should we fix a lower base price for iron ore when there is a demand even at a higher price?” asked the executive, who spoke on condition of anonymity.
He said NMDC’s pricing formula incorporates the international price benchmark, domestic demand and available domestic grades.
A mail sent to NMDC on Wednesday remained unanswered.Mining industry representatives, however, say that e-auctions are inflating prices way beyond international prices. They add that the quality and uniformity of iron ore are also not as per requirements.“This is leading to an added supply crunch, with several batches remaining unclaimed, while companies are resorting to imports,” said Basant Poddar, vice-president of Federation of Indian Mineral Industries (FIMI), India’s biggest trade body for minerals.
“There is no country in the world which runs its steel plant based on imported iron ore or iron ore available from e-auctions,” he added.
India is expected to produce up to 130 million tonnes per annum (mtpa) of iron ore as against a demand of 140 mtpa largely due to weaker output from Karnataka, Odisha and Jharkhand. Domestic output has fallen due to restrictions imposed by the Supreme Court to curb illegal mining.
Source:-livemint.com
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