Iron Ore Insight India

7/21/2019 Iron Ore Insight India

1/15

14 Oct 14


2/15

Economical Iron Ore Imports shift

JSW Steels Interest from Karnataka

E-auctionJSW Steel, top Iron ore purchaser at Karnataka e-auctions and having largest crude steel capacity of 14.3 MnT pa, has cut down its procurement from Karnataka in Q2

FY14 to 2.5 MnT; had purchased 2.9 MnT Iron ore in Q1 FY15.

The map below shows Q-o-Q comparison of JSW Steels reduced buying from Karnataka because of low cost imports. Supply from domestic market dropped and prices

increased, after mines closure in Odisha & Jharkhand. Iron ore purchase from the domestic market has fallen to 3.4 MnT in Q2 FY15, which was 4.8 MnT in Q1 FY15.

1


3/15

2.5

0.3

0.6

0.004

0.03

2.9

0.8

1

0.07

Q2 FY15 Q1 FY15

Total

Qty in MnT

Source: SteelMint Research

2

3.4

Imports2

Grand Total

Karnataka

5.4

Total

Imports

Grand Total

Odisha Jharkhand Chhattisgarh Goa

4.8

Nil

4.8

JSW Iron ore Procurement in H1 FY15


4/15

Persistent fall in Chinese spot Iron ore fines (Fe 62%) prices that slipped to 5 years low

(USD 77/MT CNF China) has made imports quite economical along with Krishnapat-

nam, Mangalore and Dharamtar port facilities. Thus, 2 MnT Iron ore was imported last

quarter from zero in Q1 FY15.

In Oct14, JSW Steel is importing 0.2 MnT (Fe 67%) DR grade Iron Pellet from Vales 9

MnT pa Pellet plant in Oman. Material will be loaded at Sohar port and unloaded at

JSW Dharamtar port in Mumbai.

The landed cost of Pellet imported from Oman at nearly INR 8,200/MT is quite competi-

tive in contrast to nearly INR 8,250/MT from its prime domestic Pellet source, Mangalorebased KIOCL.

In Q3 FY15, imports may further beat domestic Iron ore buying as Chinese fines prices

are unforeseen to pick up behind low steel demand, poor economy and huge supplies

from worlds leading miners. To add, domestic supply shall continue to be short since

resumption of non-operational mines in Odisha and Karnataka has seen no development

so far.

Qty Type Price Origin Vessel name Unloading Port

Jul'14

169,585 Fines 94.5 South Africa Eurydice D Krishnapatnam

170,767 Fines South Africa Baltc Tiger Krishnapatnam

73,755 Lumps South Africa Jaigar Mangalore

148,225 Fines 87.2 Mauritania Eternus Krishnapatnam

Aug'14

165,001 Fines 98.8 South Africa Jens Warrior Krishnapatnam

86,450 Fines 92.2 South Africa G.L. Lapaz Krishnapatnam

82,240 Fines 94.4 South Africa Double Paradise Mangalore

86,519 Fines N/A South Africa Gl Pirapo Jaigarh

174,137 Fines 96.3 South Africa Aquamarine Krishnapatnam

173,087 Fines 95.1 South Africa Bulk China Krishnapatnam

82,500 Lumps 113.6 South Africa Bulk Malaysia Mangalore

Sep'14

173,000 Fines 96.8 South Africa Cape Breeze Krishnapatnam

186,948 Lumps 104 Canada Martha Oldendorff Krishnapatnam

71,324 Fines N/A South Africa Orsolina Boglieri Jaigarh

165,736 Fines N/A Brazil Angel II Krishnapatnam

Qty in MT

CNF Prices in USD/MT


Provisional Data

JSW Iron Ore Imports in Q2 FY15

Country Wise

1.51 MnT fromSouth Africa

(76%)

0.18 MnT fromCanada (9%)

0.16 MnT fromBrazil (8%)

0.14 MnT fromMauritania (7%)

Port Wise

1.6 MnT -Krishnapatnam

port (80%)

0.23 MnT fromMangalore port

(12%)

0.17 MnTJaigarh port

(8 %)

3

Month

N/A

N/A


5/15

JSW Iron Ore Purchase in Q2 FY15 (Jul-Sep'14)

ImportJUL AUG SEP

0.6 0.9 0.6

KARNATAKA

Total-2.5

Total

2

Total-0.3

Total-0.03

Total-0.6

Total-0.004

1.5 0.6 0.4JUL AUG SEP

ODISHA


JHARKHAND

0.03 0.001 -JUL AUG SEP

CHHATTISGARH


GOA

0.004 - -JUL AUG SEP

4

Qty in MnT



6/15

Krishnapatnam Port- JSW Steel

Dhamra Port- Tata

0.18MnT

Fines

0.18MnT

Lumps

0.07MnT

Fines

SOUTH

AFRICA

CANADA

Jaigarh Port- JSW Steel

Haldia Port- Tata

Krishnapatnam Port

Tata International

0.02MnT

Fines

0.02MnT

Fines

AUSTRALIA

0.16MnT

Fines

0.16MnT

Fines

BRAZIL

5

India imports 0.8 MnT Iron Ore in Sep14Indian Iron ore imports in Sep14 fell by 20% (M-o-M) from 1.01 MnT in Aug14 to 0.8 MnT

JSW Steel was the largest importer (0.6 MnT), followed by Tata International

Apart from Australia & Brazil, steel giants have also started importing Iron ore from Canada & South Africa

Krishnapatnam port is turning out to be a major port for Iron ore import because of less waiting period and good availability of rakes



7/15

Iron Ore Exports from India in Sep14 fall by 35% M-o-M

Iron ore exports from India in Sep14 fell by 35% (M-o-M) from 390,235 MT in Aug14 to 252,500 MT

Already burdened with expensive plot rent at various ports, 30% export duty and high freight charges, constant drop in Chinese fines

prices have left exports absolutely nonviable

NMDC, which has long term agreements with Japanese & Korean steel mills, remains the largest exporter and exported 0.22 MnT ore

Majority of shipments took place from Vizag port (215,000 MT) followed by Paradip port (37,500 MT)

Indian Iron ore exporters, who had stocked 26,000 MT fines (Fe 56-58%) for export from Haldia port, are currently looking for domestic

buyers because of constant fall in Chinese spot Iron fines prices

Ports such as Haldia, Panji, Dhamra, Gangavaram, Krishnapatnam, Mundra, Karaikal, Kakinada, Manga-

lore, Goa, Ennore and Pipava have been considered but no Iron ore export were seen in Sep'14. Redi port has

not been considered.

Qty in MT

Provisional data

Source: SteelMint Research, Port Sites

Shipper

MMTC

Bagadiya Brothers

JagwaniGrand Total

Vizag Paradip Total

215,000

-

-

-

28,000

9,500

215,000

28,000

9,500215,000 37,500 252,000

Route

Indian East Coast to China

Brazil to China

South Africa to China

Vessel Type Freight

Supramax

Capesize

Panamax

12.5

18.3

15.9

Vessel Freight

Freight in USD/MT


6


8/15

Major miners in Odisha namely Rungta Mines and Essel Mining have held their offers unchanged

Another miner which is offering raw material both within & outside Odisha is Ghanashyam Misra & Sons

All prices are as per loaded into wagons & including royalty


Prices in INR/MT, loaded into wagons & including royalty


Odisha

Miners hold Iron Ore Prices

Indian Iron Ore Prices (INR/MT) in Sep'14

Miners State Grade/Fe 5- -18 mm Grade/Fe 10 30 mm Grade/Fe Fines

Rungta Odisha

Odisha

63 7,100 63 6,350 63 3,200

Essel 63 6,775 63 6,025 63 2,975

Indrani Patnaik Odisha 62 6,100 62 5,100 62 3,100

Ghanashyam Misra & Sons Iron Ore Prices

Size (mm) Grade (Fe%) Prices

10-40 65 6,000

10-40 64 5,850

5-18 63 6,200

10-40 63 5,700

5-18 60-59 5,200

10-40 59 4,7005-18 57 4,700

10-40 58-57 4,200

Fines 57-59 1,900-2,100


9/15

Prices in INR/MT on ex-mines basis including royalty

H-1 bids for Q3 FY15 (Oct14-Dec14)


OMC to sell Iron ore through national e-auction conducted by MSTC

OMC signed MoU with Odisha based miners for long term raw material linkage so as to assure them of ore supply

OMCs Daitari tender for sale of sized CLO & Iron ore fines available at Daitari region was called off after Electrosteel Steels (H-1 bidder) was ascertained to be an Iron

ore lease holder. The discrepancy arose because as per norms of OMC, lease holder cannot participate in the bidding process

OMCs Iron ore tender for sale of 61,500 MT had fetched high bids and H-1 bids increased by INR 3,00-2,000/MT over Q2 FY15 prices

TypeMinesQuantity

(MT)H-1

BidsBidders

Q2 (Jun-Sep) Prices

Change

Barbil 1040 mm, (Fe:+62%) 5,000 5,051 Anjani Steels(Chhattisgarh) 4,595 460Gandhamardan

1040 mm, (Fe:+62%) 10,000 4,701

Anjani Steels(Chhattisgarh) 4,059 650

Gandhamardan

1040 mm, (Fe:+62%) 3,000 4,651

Anjani Steels(Chhattisgarh) 3,303 1,350

Gandhamardan

10180 mm(Fe: +65%) 2,000 3,811

Priti Pragyan Minerals(Odisha) 3,505 305

Gandhamardan

518 mm (Fe:+64%) 1,500 5,551

Anjani Steels(Chhattisgarh) - -

Koira1040 mm, (Fe:

+62%) 40,000 6,209Prakash Industries

(Chhattisgarh) 4,250 2,000

Total 61,500

OMC

Odisha HC allowed RP Sao for dispatches of stocked Iron ore at mines head located in Barbil, for which it had received good response and sold around 1 MnT of stocks

RP Sao Mines

Hearing for review petition of Odisha 50:50 sales rules held at Odisha HC was conducted on 12 Sep, 2014; the hearing has been postponed till 20 Oct, 2014

Odisha 50:50 Rule

8


10/15

Chhattisgarh

NMDC rolls over Iron Ore Prices for Oct14

NMDC Iron Ore Prices for Oct14

NMDC, Indias leading miner with 30 MnT annual production, has rolled over Iron ore prices for Oct14

The miner had produced about 2.3 MnT Iron ore and sold 2.27 MnT in Sep14 (includes sale of 0.5 MnT ore via Karnataka e-auctions)

NMDC had dispatched 347 rakes in Sep14, which decreased by 14% (403 rakes in Aug14) in comparison to last month

NMDCs e-auction held on 7 Sep, 2014 for 180,000 MT Iron ore from Chhattisgarh mines has fetched high bids

Material Type Grade (Fe) Size (mm) Prices (INR/MT)

DR CLO 67 10-40 5,390

Baila Lump 65 6-40 4,600

Baila ROM 65 10-150 4,030

Fines 64 0-10 3,160

Prices in INR/MT on ex-mines basis including royalty


* Bid prices are as per sources; company officials have not given any confirmation regarding this

All prices are basic in INR/MT. Royalty @15% and other taxes extra

(B) -Bacheli; (K) - Kirandul

Ore Type Qty

(MT)

Base

PriceBid Price*

Bidders

DR CLO (B) 20,000 5,390 5,651-5,661 Mahendra Sponge, Gopani Sponge,

Vandana,Sunflag

Baila ROM

(B)

20,000 4,030 NA NA

Baila Lumps

(K)

40,000 4,600 4,635 Tata Sponge, BS Ispat

Baila Fines

(B)

60,000 3,160 3,354 Tata Steel

Baila Fines

(K)

40,000 3,160 3,344 Tata Steel

9


11/15

Qty in MT


Qty in MT

Source: SteelMint Research; Government Websites

Note: Grade & bid prices are weighted average

Jharkhand

Rungta Mines raises Iron Ore Fines Prices by INR 200-250/MT

Rungta mines has increased Iron ore fines prices from Jharkhand by INR 200-250/MT; Fe 63% fines is at INR 3,750/MT (loaded to wagons)

On 05 Sep, 2014, District Mining Officer (DMO) of Chaibasa (Jharkhand) had ordered 12 ore mines (11 Iron ore & 1 manganese ore) to cease operations as they

were running under 2nd & 3rd subsequent deemed renewal

The effect of mines closure on Indian domestic market is less as captive miners have sufficient stockpile and Iron ore imports to India are economical

Jharkhand government following the SC decision has asked 11 banned Iron ore mines to pay amount of Iron ore extracted from the mines from the expiry date

of lease to date of current renewal

Karnataka

Top 3 Iron Ore Buyers in Sep14

Iron Ore Sales in Sep14 hit by Import Viability

In Sep'14, total Iron ore sales amounted to 1.45 MnT against 1.37 MnT in Aug14; NMDC sold 0.6 MnT via Karnataka e-auctions

JSW Steel was the largest buyer with 0.6 MnT followed by Slv Steels & Alloys and BMM Ispat

Floor & bid prices for lump (Fe 62%) were firm at INR 3,980/MT & INR 3,990/MT respectively (M-o-M)

Floor & bid prices for fines (Fe 60%) stood at INR 2,646/MT & INR 2,648/MT respectively, with an increase of INR 100/MT in floor price (M-o-M)

Mines Bid Qty Allotted Qty

NMDC 716,000 616,000

Other Mines & Stockyards 856,000 836,000

Total 1,572,000 1,452,000

Company Fines Sub Grade ROM Grand Total

JSW Steel 428,000 208,000 - 636,000

Slv Steels And Alloys - - 150,000 150,000

BMM Ispat 128,000 - - 128,000

10

Lumps


12/15

Chinese Spot Iron Ore Fines lose USD 32/MT since Apr14

Chinese spot Iron ore fines prices have slipped to 5 years low in Sep14 owing to huge Iron ore supplies from Australia & Brazil in last few months

China

Worlds Leading Miners Iron Ore Production (MnT)

Miner 2013 2014 (E) After 2015 (E)

Rio Tinto 266 295 360

BHP Billiton 225 245 290

Vale 299.8 360 450

FMG 125 160 -

11


13/15

Iron Pellet Prices surge in Odisha

The average price for Fe 62% spot Iron ore fines in September, 2014 was USD 82/MT CNF China, which is down by USD 10/MT in comparison to Aug14

Chinas manufacturing sector witnessed a fractional improvement in operating conditions and HSBCs China final Purchasing Managers Index (PMI) stood at 51.1

Pellet prices in Barbil which had increased to INR 7,800/MT (loaded) in the start of Sep14 remain firm. Economical Pellet offers from international suppliers have

restricted prices to rise further and scarcity of Iron ore fines has effected Pellet production

Currently, East India Pellet producers are struggling for Iron ore. JSPL is in discussion for immediate delivery of DR/BF grade Brazilian Pellet and Iron ore from South

Africa and other prospective countries. It has already imported 20,000 MT South African fines at Paradip port

KIOCL had floated tender for domestic sale of 0.2 MnT BF grade Pellet on 25 Sep, 2014 for which prices remain constant at INR 7,750/MT ex-works Mangalore for Oct14

KIOCL to export 55,000 MT Pellet to Iran for the first time; vessel name MV HAMGAM

Pellet movement through railways had declined (M-o-M) by 27% in Sep14 (60 rakes ), from 83 rakes in Aug14

12


14/15

Mill Scale

In Sep14, 50,500 MT Mill Scale was exported to China against 36,000 MT in Aug14. Continual fall in Iron ore fines prices in China has pushed exporters to release

the buildup stock; alterations in fines prices directly effects Mill Scale offers

Majority of shipments took place from Kandla port (29,000 MT) followed by Chennai port (21,500 MT)

Exports from India in Sep14 up by 40% M-o-M

Mill Scale Exports in Sep14

Mill Scale, generated from rolling mills, is an exportable and finished material with high grade (Fe 68-70%) and density. It is free from export duty and

differential based charges (DBC).

In an auction, Jindal Steel & Power (JSPL) has invited bids for sale of around 2,000 MT Mill Scale from its Patratu plant located in Jharkhand.

Meanwhile, Monnet Ispat & Energy (MIEL) has also invited bids for sale of 250 MT Mill Scale laying at Raipur (Chhattisgarh) plant.

Export

DateVessel Name Qty Price

Destnaton

Country

Destnaton

Port

Indian

PortShipper Name

25-Sep-

14Great Royal 21,500 73-74 China Qingdao Chennai

Independent

mineral, Kineta

Global

18-Sep-

14- 1,999 88 China Nantong Kandla -

17-Sep-

14

Propel

Progress27,000 88 China Jiangsu Kandla Space Exim

Qty in MT

FoB Prices in USD/MT


Exports till 25th Sep14

13


15/15

Head Office

#301, Jeevan Parisar,

Rajeev Nagar

Behind Crystal Arcade

Raipur - 492 007 (C.G) IndiaTel: +91 9575100530

Email: [email protected]

Web: www.steelmint.com

Other Offices

5th Floor, Vishvakarma Build-

ing, 86, Topsia

Road, South-West Block

Kolkata - 700 046 (W.B) IndiaTel: +91 33 22852063

Report by

Seema Goenka

(Operations Manager)

Email: [email protected]

Phone: +919575100430 (Ext 234)

Alok Singh Thakur

(Associate-Analyst)

Nishtha Mukerjee

(Trainee-Research) Stee intTM

Steeling is Basicl

Mill Scale (Fe 70/68%) Prices

Domestic Prices (Basic) in INR/MT

* FoB price in USD/MT

**CNF price in USD/MT


Places Prices

Raipur 3,500

Vizag 3,860

Kandla 3,670

Chennai 3,640

India Export* 81

China Import** 91

Documents

Iron Ore Insight India