Iron ore imports by the country plummeted 62.9 per cent to 5.6 million tonne in 2015-16 compared to 15.1 mt in the year ago financial year on a glut in the domestic market that ensured availability of ore at cheaper prices, cutting dependence on imports.
As per provisional figures, the country's iron ore production is pegged at 155 mt by the end of FY16, nearly 20 per cent higher than 129 mt clocked in 2014-15. Odisha, the biggest iron ore producer, has seen the sharpest jump in iron ore output to a level of over 80 mt, about 70 per cent more than the lowly 47 mt, which the state recorded in 2014-15 when some of its key mines had to shut production on the orders of the Supreme Court. Karnataka and Chhattisgarh recorded iron ore production of the level of 25 mt. Goa which kicked off production following removal of export duty on low grade ore, turned in production of five mt. Revival in iron ore production fuelled growth in exports from the country from 4.8 mt to 6 mt, an increase of 25 per cent. The surge in export was on the back of waiver in export duty and pruning of rail freight.
Pukhraj Sethiya, associate director (metals and mining), PwC said: "Easing domestic supply and subdued demand from steel sector has provided sufficient raw material to domestic steel producers. This has led to slowing import of iron ore which India has seen for last couple of years due to mining restrictions. Given slowing steel demand and oversupply iron ore market, India's iron ore import is expected to see declining trend."
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Manish Kharbanda, executive director and group head (mines & minerals), JSPL said: "As availability of comparatively cheap iron ore supplies increased, iron ore imports significantly dropped down.
Iron ore imports in 2016-17 would be limited, since only the plants on the west coast will find the import cost competitive with domestic prices."
He said, global iron ore prices, in this financial year, are likely to hover in the range of $48-52 a tonne.
Global iron ore prices remained weak for most part of the last financial year except February when some uptick in demand was noticed. Globally, iron ore prices slumped by 35 per cent between June 2015 and January 2016. Total global iron ore production in 2015 stood at over 2300 mt but demand subsided, leading to global oversupply of around 50 mt. Iron ore costs are expected to fall further in this financial year as big miners like Vale, Rio Tinto and BHP Billiton would add 90 mt of incremental production.
"Imports declined due to sharp fall in domestic prices and lower production of steel as well. During FY15, National Mineral Development Corporation (NMDC) was reluctant to cut prices and hence some of the steel producers preferred import, however, in FY16, NMDC has cut prices sharply and hence steel producers preferred domestic material compared to imports. Secondly, last year, there was a flood of imports from China, Russia and other Middle East countries and hence, steel production was impacted resulted in lower imports", said a metal sector analyst.
"On iron ore imports, I don't expect any material increase in iron ore imports as we have adequate production in domestic market, while on global iron ore prices, I expects the subdued trend to continue to oversupply and shrinking demand from China. Likely to trade in $40-60 range for the year", he added.