| Iron ore export up 13% in H1 on China demand | |
| BS Reporter / Mumbai November 08, 2009, 0:58 IST | |
Iron ore exports jumped 13 per cent in the first half of the current financial year due to a sudden spurt in Chinese offtake as steel mills build their inventory.
According to date compiled by the Federation of Indian Mineral Industries (FIMI), the total shipment was recorded at 45.03 million tonnes in the first half ended September compared to 39.78 million tonnes in the corresponding period last year. Exports during September, however, shot up sharply by 88 per cent as steel mills in China, the world’s largest ferrous metal producer, intensified building of inventories from various sources.
India, generally, ships around 100 million tonnes of iron ore mainly of fines with less than 60 per cent of iron content as domestic steel mills are not equipped to use such variety of ore. Also, the abundance of lump ore with over 63.5 per cent of iron content has lead them not to upgrade technology to convert low-grade iron ore into high grade. Therefore, miners have no option but to export.
The mining process allows excavation of both types simultaneously.
The Chinese demand has resumed after the monsoon, said FIMI Advisor SBS Chouhan. It’s good that mining companies were shipping iron ore not consumed by domestic steel mills, Chouhan said.
However, Indian ore exports are facing huge price resistance as trades are executed mainly on the spot basis. Since, China has not yet signed long-term supply contracts with global miners, including Rio Tinto, Vale and BHP, steel mills there are fed mainly on short-term supply basis and India is gaining a major share of the Chinese market.
Chinese steel mills are technologically advanced to convert low-grade iron ore into high grades and, hence, they face no problem in using imported ore from India.
Today, iron ore with 58 per cent of iron content is selling at $55 free-on-board (fob) which is a good news for Goan miners as prices have not declined. However, the Indian iron ore miners have been facing huge resistance on price front from Chinese steel mills, said Haresh Melwani, CEO, HL Nathurmal & Co, a Goa-based iron ore miner and exporter.
Lumps with 63.5 per cent of iron content is quoted around $95-97 a tonne including freight.
China produced 500 million tonnes of steel last year and is targeting to produce 600 million tonnes this year despite the global steel demand is estimated to decline between 10-15 per cent due to a slowdown in construction activities.
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