The earthquake in Japan may ease the soaring iron-ore prices in the near term.
Japanese Steel Mills (JSM), which account for about 10 per cent of the world steel production, imports all of its raw materials. While India caters to some of JSM’s iron ore requirements, coal is mostly supplied by Australian miners.
Initial reports indicate that the steel mills have not suffered damage, but logistics could be a problem with ports shut. India’s largest iron ore producers – NMDC and Sesa Goa – supply to JSM. “We have to assess the situation,” said Sesa Goa Managing Director P K Mukherjee.
Indian iron ore prices had eased a fare bit on the back of a proposed hike in export duty in the budget, and are currently hovering at $150 a tonne compared to $160 a tonne in early February.
Global coking coal suppliers are queing for their quarterly contracts for April and the JSM pricing is usually taken as the benchmark level. “While some mills have entered into contracts, those who have not, are likely to see some downward pressure,” said an industry insider. Coking coal prices are set to rise 47 per cent over the previous quarter to $330 a tonne.
The steel industry believes raw material prices will ease if Japan fails to procure its supply because the market will not be able to absorb it. The fini-shed steel product sector, however, might not be impacted.