JSW, Tata Steel plan to raise iron ore imports this fiscal

Indian mills imported 500,000 tonnes in 2013-14; the number is projected to rise sharply this year

After seeing a massive fall in 2013-14, India’s iron ore imports are set to increase sharply in 2014-15.

The recent closure of mines in Odisha and continued problems in Goa and Karnataka had resulted in less production of iron ore. A sharp drop in spot prices abroad, coupled with a rising rupee and the increase in domestic ore prices, have prompted steel makers to actively pursue its import.

Tata Steel is said to have imported around 30,000 tonnes on a trial basis from Australia. JSW Steel is getting its first shipment by the end of this month. It plans to import 500,000 tonnes and increase this if spot prices decrease further this year.

“To start with, we are importing high quality ore, with 64 per cent and above iron content grades, to make up for the shortfall in domestic availability. We are looking at options to import from Australia, South Africa and Canada, as spot prices are $90-95 a tonne,” said Jayant Acharya, director, commercial & marketing, JSW Steel. “We are importing high-grade ore at almost the same price of lower grades in India and blending these. Using high grade ore, which contains lower alumina and silica, will provide higher yields in our furnaces and improves operational efficiencies.” JSW is currently operating at 85 per cent of its capacity at all its steel plants. With the imported ore, it aims to maintain the capacity and increase it further, he added.

For JSW, the landed cost of imported ore is around Rs 5,600 a tonne at its Dolvi plant (Maharashtra’s Raigad district), as against Rs 5,400 a tonne for ore sourced from Chhattisgarh or Odisha,  industry sources said.

Tata Steel did not confirm its import plans; an email sent to the company to elicit details was not answered. However, industry sources said after is trial import of 30,000 tonnes from Australia, it planned to import a higher quantity through its London office.

Though it is too early to estimate the total imports this year, analysts feel it could be higher than those in the past two years. “Between April and May, the shipments have been only on a trial basis, amounting to 35,000 tonnes. In June, it seems only one to three shipments might arrive, amounting to 250,000 tonnes (if they come in June). So, the total for the first quarter would be close to 300,000 tonnes only. From July onwards, the figures could sharply rise for next few months. As of now, for the whole year, we cannot post a figure as JSW is still in talks, while major and medium producers in eastern India are holding negotiations,” said Prakash Duvvuri at OreTeam Research, Delhi.

The spot prices of iron ore fines have been dropping in recent months, with current prices at $90-95 a tonne from about $120 in March. Iron ore lumps are priced $7-8 a tonne higher than the fines. “Prices internationally have remained range-bound at $100 and below. At this price, it works out cost-effective for us to import for our Dolvi and Vijayanagar (Bellary, Karnataka) plants,” Acharya added.