Iron ore import goes up by 190% in first five months of FY19
Iron ore import into the country zoomed 190 per cent to 6.34 million tonnes (mt) during April-August, the first five months of this financial year.
This data from the Pellet Manufacturers Association of India (PMAI) shows a projection of over 12 mt for the full year. In 2017-18, ore import was 8.6 mt, itself 48 per cent higher than in 2016-17.
Import is on an upswing since steel plants on the coast have shown an increasing tendency to import the key ingredient. Importing is cheaper option for such units than buying from the domestic market.
A senior executive with a steel company said, “Price hikes (of ore) in the domestic market have been exorbitant in the past three to four months. Importing of ore is viable for operations.”
Between July and September, prices of iron ore fines in Odisha, the largest producing state, rose 80 per cent; prices of lumps moved up 29 per cent. Government-owned NMDC, the single biggest producer, raised prices twice last month. In the latest one, it raised price of lumps by 8.4 per cent to ~3,850 a tonne and those of fines by 6.4 per cent to ~3,310 a tonne. The company ascribed this to less production due to the rains and also robust demand, with firming up of steel and sponge iron prices.
Domestic production of iron ore is also rising. The country produced 210 mt in 2017-18. In FY19, output is tipped to rise by two to five per cent, helped by stable demand from the automobile and infrastructure industries, according to a report by CARE Ratings.
Mining companies say supply bottlenecks are escalating the landed cost of iron ore for steel units. “There is abundance of ore but miners are not getting enough railway rakes, as these are diverted to the coal sector. Due to logistics constraints, the landed cost of ore is shooting up for steel plants on the coast and they are sourcing more from import. Also, there are limitations on availability of higher grade ore from domestic mines as they get older and the quantity of fines extracted is higher,” said a mining industry source.