IRON ORE

Extracted & Refined by:-

AFTAB.MULLA

AGENDA

IntroductionHistoryCurrent ScenarioPrice forecastUses of Iron OreRelation Between

Iron and Steel

DevelopmentDemand and

Supply Impact on

EconomyContract

SpecificationConclusion RecommendationsBibliography

INTRODUCTION

Iron Ore is the Heart of Steel. Classification– More than 54%– Less than 54%

Consists of Rocks and Minerals from which metallic iron can be economically extracted.

Raw Material for Pig Iron.

HISTORY

The first iron production started in the Middle Bronze Age but it took several centuries before iron displaced bronze.

Iron working was introduced to Greece in the late 11th century BC.

The spread of ironworking in Central and Western Europe is associated with Celtic expansion

In 1960s and 1970s due to high demand with upgraded Technology in Japan, it marked the Bench mark in Production.

CURRENT SCENARIO

GLOBAL SCENARIO

INDIAN SCENARIO

GLOBAL SCENARIOTop 5 iron ore Producing Countries

1.China 2. Australia 3. Brazil 4. India 5. South Africa

Top 5 Consuming Countries1.China 2. Japan 3. India 4. USA 5. Russia

Top 5 Exporting Countries1.Australia 2. India 3. brazil 4. Canada 5. South Africa

Top 5 Importing Countries 1.China 2. Japan 3. South Korea 4. Germany 5. Taiwan

INDIAN SCENARIO

Steel Prices (influencing factors) Domestic demand Supply conditions International prices Import and Export Duties

Government and different producer and consumer associations regularly monitor steel prices.

India Reserves 25 billion tons (6% of Global) Ranked 5th – High Quality Reserves 4th Largest Producing country 2nd Largest Exporting country

Price IndexMonth Price ($) Change (%)

Mar-11 169.36 -9.52%

Apr-11 179.26 5.85%

May-11 177.1 -1.20%

Jun-11 170.88 -3.51%

Jul-11 172.98 1.23%

Aug-11 177.45 2.58%

Sep-11 177.23 -0.12%

Oct-11 150.43 -15.12%

Nov-11 135.54 -9.90%

Per Capita Steel Consumption

Place Kgs

India 45

China 350

World Average 150

PRICE FORECAST• Prices are currently high due to over capacity build

up and it expected to come down to more economic level.

• The cost of new potential iron ore systems (e.g. West Africa and Australia) has increased recently due to the current commodity price boom and the consequent equipment and skill shortages.

• Demand for Steel: Steady growth of steel demand is expected until 2025

USES OF IRON ORE

About 98% of iron ore is used to make steelA very small amount of the consumption– used in magnets, metallurgy products, auto parts,

tracer element in biochemical research. Iron blue: in paints, printing inks, plastics, cosmetics (eye shadow), artist colors, paper dyeing, fertilizer ingredient, industrial finishes, etc.

RELATION BETWEEN IRON AND STEEL

Steel is an Alloy. Iron is an Primary element. Iron ore being primary raw material for Iron and steel

making constituents 53% by weight but 11% only by cost.

DEVELOPMENT

India, Asia's 2nd Largest economy announced a 50% jump in export duties to 30% from 20%, to conserve supplies for domestic steelmakers.

Improved Performance due to;– High volume– Government Policies– Increased operating efficiency – Financial restructuring

17

• Domestic Consumption 45%

• Exports 55%

Consumption Pattern of Iron Ore

DEMAND AND SUPPLY

• India's iron ore exports are likely to be 75% lower than previously expected in the quarter ending in March as a rise in export duties kicks in as part of the government's push to conserve supplies for domestic steelmakers.

• No immediate ‘boom’ in demand in the Indian economy is expected, but a rather moderate short-term and medium-term growth path, only taking off beyond 2015.

IMPACT ON ECONOMY

• Exports were declined to 50 million tons from 97 million tons in current financial year(2011-2012).

• Given that India had exported about 50 million tons in the 9 months to December, it is likely to ship only another 5 million tons in the three months to March 31.

Contract specificationSymbol IRONORE

Contract start day 1st working day of contract launch month.

Last trading day Last calendar day of the contract expiry month. If last day is holiday or Saturday then preceding working day.

Trading period Mondays through Saturdays

Trading session Monday-friday:10.00 a.m. to 11.30 p.m. Saturday :10.00 a.m. to 02.00 p.m.

Trading units 100 DMT

Quotation/Base value Rs/DMT

Maximum order size 5000 DMT

Tick size(minimum price movement)

Re 1/DMT

Initial margin Minimum 8%/based on SPAN whichever is higher

CONTRACT LAUNCH CALENDAR OF IRONORE

CONTRACT LAUNCH MONTHS CONTRACT EXPIRY MONTHS

October 2011 January 2012

November 2011 February 2012

December 2011 March 2012

January 2012 April 2012

February 2012 May 2012

March 2012 June 2012

April 2012 July 2012

May 2012 August 2012

June 2012 September 2012

July 2012 October 2012

August 2012 November 2012

September 2012 December 2012

CONCLUSION

• Sustained and economical supply of iron ore with consistent quality is must for being competitive.

• It is a key product and raw material as well required in manufacturing of Iron, Steel and stainless steel.

• It costs less and at a same time it weighs more comparatively.

• Government’s focused approach and interventions are facilitating fast track growth.

Bibliography

• mcxindia.com• aurthorstream.com• moneycontrol.com• matrixinfobiz.com

Thank You