Iron ore production is on upswing as many mines have started operating after a few years of suspension, following Supreme Court orders. According to provisional figures, India’s iron ore production is estimated to go up nearly 20 per cent to 155 million tonnes in 2015-16.
Imports plummeted 62.9 per cent to 5.6 mt in 2015-16, compared with 15.1 mt in the year-ago period. These are slated to weaken further in 2016-17, amid higher domestic production forecast. An industry source has pegged ore production in FY17 at 180 mt. “Robust buying by China and revival in steel demand after the fixation of minimum import price would escalate production,” he said.
Presently, China imports around 80 per cent of its iron ore requirement, compared with 70 per cent two years earlier. It imported 935 mt of iron ore in 2015. China’s demand revived recently after a lull of over a year. Odisha, the biggest iron ore producer, has seen the sharpest jump in output to a bove 80 mt from 47 mt in FY15, when some of its key mines had to shut production after orders. Ore production may go up in the state with the Court clearing the decks for restarting 102 more mines, freeing up to 35 mt output.
In Goa, where production was five mt in 2015-16, following lifting of export duty on low grade ore, the figure could go up to 30 mt.
“China is again buying iron ore and this might push global prices moderately. In India, low grade iron ore, specifically from Goa, may find buyers in China,” said Manish Kharbanda, executive director and group head (mines & minerals), Jindal Steel.
Karnataka and Chhattisgarh recorded 25 mt production in 2015-16. “Major growth set to come from NMDC. In FY16, NMDC cut prices sharply, and hence, steel producers preferred domestic material compared to imports. In this financial year, NMDC’s production may move up 12-13 per cent. Also, Steel Authority of India Ltd and private players like Tata Steel are going to ramp up captive production to feed their steel units,” said a metal sector analyst.
Pukhraj Sethiya, associate director (metals and mining), PricewaterhouseCoopers (PwC) said, “Easing domestic supply and subdued demand from steel sector have provided sufficient raw material to domestic steel producers. This has led to slowing import of iron ore which India has seen for last couple of years due to mining restrictions. Given slowing steel demand and oversupply iron ore market, India’s iron ore import is expected to see declining trend.”
Global iron ore prices are likely to hover in the range of $48-52 a tonne.
Global iron ore prices remained weak for most part of the last fiscal except February when some uptick in demand was noticed. Globally, iron ore prices slumped by 35 per cent between June 2015 and January 2016. Total global iron ore production in 2015 stood at over 2300 mt but demand subsided, leading to global oversupply of around 50 mt. Iron ore costs are expected to fall further in this fiscal as big miners like Vale, Rio Tinto and BHP Billiton would add 90 mt of incremental production.
Source: Business StandardPrevious Next