Indian iron-ore exports rise, domestic price surges on strong international market

KOLKATA (miningweekly.com) – The rising international price of iron-ore has triggered a 10% spike in India’s domestic price and has raised the spectre of shortages for domestic steel mills as larger volumes are being diverted for overseas shipments.

Information collated from at least three miner-exporters with operations in Odisha indicates that with international prices of high grade iron-ore fines (Fe content 63.5% and above) hitting a recent high of $80/t CFR China, local merchant and miner-exporters are securing higher margins from overseas shipments than from domestic sales.

Indicative figures available from these miner-exporters show that since last month, the domestic sale price for high grade iron-ore lumps has been increasing from Rs2 600 ($40.60) a ton to Rs2 860 ($44.68) a ton. The domestic sale price of high-grade fines increased by about 7% from Rs1 300 ($20.30) a ton to Rs1 400 ($21.80) a ton.

If the current international price trends are sustained through the coming months, Indian iron-ore exports are forecast to be 40-million tons during 2017/18, on a total production of 200-million tons, as more exporters pushed volumes overseas, the miner-exporters have said.

Two officials in domestic steel companies have said that local iron-ore prices are expected to surge further as miners in Odisha are expected to factor in the penalty imposed on them by the Supreme Court into prices charged to steel mills.

Earlier this month, the apex court directed the Odisha government to recover 100% of the value of ore mined illegally in the province. This will entail the local government to recover an estimated $3.17-billion from miners and the latter will pass on this penalty to buyers, the officials have noted.

Curiously, at a time when domestic steel mills are complaining of rising prices of raw material and ever tightening of supplies coinciding with rising international prices, the Federation of Indian Mineral Industries (FIMI), the representative body of miners, has claimed a sharp rise in iron-ore stockpiles of about 149-million tons as of March 31.

FIMI has claimed that the stockpile is the fallout of the government’s refusal to lower or scrap the 30% export tax, with miners facing a double whammy of no takers of the idle stock, as ore with Fe content lower than 62% does not find takers among local steel mills, while, at the same time, the incidence of a 30% export tax makes export of such low grade iron-ore unviable.