Record iron ore glut of 204 mt triggers price fall IRON ORE PRODUCTION
Weak domestic demand, despite expanding iron ore production, has led to record stockpiling in the country.
The inventory at mine pit heads had climbed to 149 million tonnes at end-March, when the financial year ended. Total stocks are estimated at 209 mt, a record. Export, the only outlet for excess ore, is unviable with the present 30 per cent export tax and softening of international prices. The price of the benchmark 62 per cent iron ore fine is at an 11month low of $55.43 a tonne.
Output in FY17 was 191 mt but domestic demand was only 107.9 mt, growing barely 10 per cent over a year. In the same period, production moved up 23 per cent. Though export saw a substantial increase to 28 mt in the year, from 4.5 mt in 201516, these were mainly by government-owned NMDC. Its export is canalised through MMTC, another central government entity, and enjoys a concessional export duty of 10 per cent. With the Supreme Court banning ore export from Karnataka, it was largely shipped from Goa, which produces low grade ore, attracting nil duty.
Odisha and Jharkhand are contributing to 85 per cent of the stockpile at mine heads. Both states produce iron ore of higher grade (more than 58 per cent), whose exports are taxed at 30 per cent. The Federation of Indian Mineral Industries recently asked the Union finance ministry to end the export duty for ore with up to 62 per cent iron content. Earlier, the Odisha government had alerted the Union mines ministry on the rising stocks and the need to reduce export duty to nil.