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Indian miners and traders are confident that recent drop in international iron ore prices will not trigger import orders from local steelmakers due to higher transportation cost at ports and gradual easing of supply situation.
Besides, the global rates are still higher than locally produced iron ore and hence buyers would prefer to rely on domestic supplies, they said.
Prices of most traded grade of iron ore fines in Chinese market fell to $90.90 a tonne today, hitting more than 21-month low as demand waned in that country amid slowdown of construction activities. The rates have been hovering around $90 for last three weeks.
Miners in Odisha, which accounts for more than half of total Indian output of about 135 million tonne, said, the landed cost of imported ore is still higher than the pit head price of the material.
“Iron ore fines with 62 per cent Fe content is now sold at around Rs 2,500 at mines pit head. After adding royalty, taxes and the cost of transportation to plant, it would be around Rs 4,500 per tonne, which is still lower than import cost of Rs 5,400 per tonne at ports. I do not think the buyers will be interested for imported ore at this price,”said an official with Sirajuddin mines, which produces more four million tonne of iron ore every year.
Steel makers who source ore from Odisha, also echoed about the price issues for avoiding imports.
“I do not think it would be viable for us to import at current rates,” a trader of JSW Steel said. The company procured nearly a million tonne ore from Odisha last fiscal.
Tata Steel, which has already ordered for nearly six consignments of iron ore when Odisha government asked it to halt mining operation at eight of its mines following a Supreme Court order, said, it could possibly cancel some orders as it has recently got the permission to restart mining operation.
“Importing iron ore would never be suitable for us, but we had ordered for six consignments owing to emergency needs. Since most of our mines are working currently, we might cancel some of the shipments if it is possible,” said an official of the company.
The company has, so far, received two iron ore consignments of more than 70,000 tonne fines unloaded at Paradip port. Odisha government has allowed operation of eight iron ore mines by invoking special provision mentioned in the MMDR act, easing supply problems for Tata Steel and Steel Authority of India Ltd (SAIL) plants.
Official sources said, the state government would soon allow liquidation of stocks at other 18 mines shut down by the top court order, improving supplies by around 12 million tonne.
