Indian steel industry facing severe shortage of iron ore: Maya Iron Ores

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Last Updated : Jan 20 2013 | 2:28 AM IST

Countries like Australia and Brazil are reaching out to strengthen the iron ore export industry, which is expected to boom for the next five years, whereas India, the third largest iron ore exporter, is under threat of severe damage to the iron ore exports, if practical and viable mining policies are not implemented immediately. 

With the blanket ban continuing in Karnataka, Steel industry in India is struggling to meet the production requirements, with severe shortage of raw material. If the ban extends for few more weeks, many units will face shut downs shortly. Indian steel makers are investing in iron ore exploration overseas, in countries like Afghanistan, with their domestic growth largely affected by regulatory issues. This is despite the fact that India is gifted with billions of unexplored ore deposit. A strong mining regulation is a must to curb the illegal mining, but the mining should start in full swing in order to help the domestic steel and iron ore export industry. 

The supplies from India are quite tight with monsoon at its peak and reduced mining throughout the country. In addition, the trucker’s strike has further dented the movement of material to the port. 

The Chinese domestic steel industry has not been affected by the financial crisis that has hit the developed world. With the busy season approaching in China, the domestic steel demand will gain its momentum pushing the raw material prices to further higher levels. For 63% grade Indian iron, the CFR prices reached $188 per metric ton on Friday. The spot transactions have improved in the last week with traders more active in the market. The Chinese steel mills are restraining from aggressive ore buying hoping the prices to come down. A reduced steel demand due to global financial crisis is cited for a drop in iron ore prices in the coming weeks. 

Chinese crude steel output is expected to keep its pace with domestic demand being robust for the month of September. The Ore supply from India will still be on depleted levels, which can take the 63% grade CFR price to $190 to $195 levels shortly. 

With the increased iron ore demand, the freight market faired well, posting a decent gain last week. The capsize rates hiked stronger compared to Panamax and Supramax rates. The trend is expected to be stable with average ocean rate for India-China route to be in $16 to $17 per metric range for the rest of the week. 

Complied by Praveen Kumar, Chairman, Maya Iron Ores

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First Published: Aug 30 2011 | 4:30 PM IST

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