The Indian Supreme Court’s partial lifting of iron ore mining in Bellary of Karnataka state is not going to help much for the international buyers as the ban continues for the export from this region. The supply from India will still run on thin lines until Goa port resumes its operation in September. Indian iron ore stockpile in Chinese ports have posted negative numbers for the last few weeks. The low grade Indian iron ore is currently in high demand owing to costlier high grade ore and lack of supply from the Indian region.
Indian steel making industry was already under raw material supply pressure since very few mines are operational in Orissa. The blanket ban for mining in Karnataka region by the Supreme Court has further ratified the shortage of iron ore supply for the industry. The ban, in a way, would help the authorities to clean and filter the mining sector efficiently, but a prolonged ban would dent the steel making industry badly.
The Indian steel industry will have multi folds growth in the coming years, with iron ore requirement soaring to much higher levels. If our mining resources are not properly managed and if scientific methods are not used for efficient mining, we are going to face acute shortage of raw material availability for manufacturing industry.
It would require collective efforts from all parties involved to formulate a specific plan to eradicate illegal mining, installing scientific mining methodology, conserving the environment, indigenous development of displaced community, and allocating resources appropriately for both domestic and global usage.
A weak US economy and a troubled Euro zone can bring a negative vibe to the overall booming commodity market. If the consumer confidence is not reinforced shortly for the US economy, a worldwide shortage in demand can loom over the industrial sector. It seems that the Chinese authorities have succeeded to an extent in arresting the soaring inflation, as the recent numbers have shown a drop in inflation. However the authorities will still keep the credit conditions pretty tight, which will keep the rising prices under check.
The freight market marginally improved with higher booking enquiries flowing in. The increased iron ore prices have installed more activity in mid-sized vessel category. The pace would pick up by September as the monsoon will recede by then. Moderate hike in freight rates are expected in the next two weeks.
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The price for high grade iron ore of 63% grade from India will hover in $188 to $190 for the rest of the week with purchases pretty much stable. The low grade ores from India (between 50% to 57% grade) will attract more buyers with higher number of fresh transactions expected in the next few weeks.
(Complied by Praveen Kumar V, chairman, Maya Iron Ores)