India’s Short-Term Iron Ore Supply Not Looking Promising at All

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Commodities, Exports, Imports

India’s iron ore situation in the new financial year does not look very encouraging, with some predicting exports to remain range-bound between 8-9 million tons. India will end the year as a net importer of the ore, agree most analysts, bringing in about 20 million tons the next fiscal year.

Federation of Indian Mineral Industries (FIMI) Vice President Basant Poddar told the Press Trust of India that iron ore exports would not go beyond a single-digit figure, but imports would.

A court-imposed ban on mining in many producing regions like Karnataka, Goa and Odisha has severely impacted iron ore exports, resulting in a drop of 68.3 percent in shipments during the April-January period of the current year to 16.34 million tons.

It is being predicted that India may finish the current financial year with a net import of 20 million tons of iron ore. Experts like Mr. Podar do not see import figures dropping in the new year.

The ban on iron ore has impacted the index of industrial production (IIP) figures with contraction of 4 percent in mining output for December 2012 as compared to 3.3 percent in the same month in 2011, while the IIP for December, 2012 shrunk 0.6 percent.

A report by research and analysis firm CRISIL Research also predicted that for the next couple of years, the iron ore demand/supply balance in India was expected to be tight, with production of iron ore expected to be in the range of 125-145 million tons.

Domestic demand, on the other hand, would be between 130-140 million tons. Due to this, iron and steel companies could face an acute shortage of iron ore in 2012-13.

The situation is expected to improve marginally in 2013-14, the report added, with prices easing up slightly.

To be continued in Part Two.

Sohrab Darabshaw contributes an Indian perspective to MetalMiner.

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