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PrintBusiness Standard reported that prices of iron ore and chrome ore are witnessing downward pressure on poor demand from within the country, precipitated by stagnated consumption growth of finished steel products.
In Odisha, the major iron ore producing state, the rates have been hovering around INR 5000 to INR 6000 per tonne for 62 to 65 grade mineral for last one month.
An official of Altrade Group, which has five iron ore mines in the state said that “The rates will stay at current levels for next 1 month or so. Actually it should be coming down as demand for the mineral is not so strong. But supply problems are supporting the rates.”
Major miners such as Essar and Rungta have rolled over the rates of iron ore lumps from November levels in anticipation of weak demand from sponge iron makers, a major user of the raw material.
A trade source said that “The iron ore rates have been trading at similar levels for past 1 month due to sluggish demand from sponge iron makers as steelmakers are preferring to use imported scrap instead of sponge iron. The gap between supply and demand has been another reason for weak trend in prices.”
Iron ore miners in Odisha, as per an executive order issued by state government, have to reserve half of their monthly output for consumption of local steel mills, who need about 16 million tonne ore every year, out of 60 million tonne total output of the state.
Mine operators said that “Hence, while tepid demand from sponge iron plants pressurised the rates, limited supply for out of Odisha buyers kept prices supported for last 1 month.”
In global markets, though iron ore rates have gone up recently to trade at 3 month high of USD 140 a tonne, analysts are expecting a correction soon on hopes of better supplies of the steel making raw material.
Ms Ashima Tyagi, senior consultant with Infraline Energy said that “It is highly likely that Indian iron ore prices will depress next month from the current levels. This is because prices increased by some miners last month would not be sustainable as the move is putting negative repercussions on the steel players amid weak demand for finished products.”
She said that “This is further compounded by the fact that demand from China would also remain low. The reasons include traditionally curbed construction activity during the winter months.”
Prices of chromium, used in stainless steel making has also witnessed a downward trend recently.
In the e auction of chrome ore conducted in the first week of December by Odisha Mining Corporation the rates declined by 2.3% to trade at INR 13,954 a tonne. In the previous auction the rates had dropped by 1.2%.
A local ferrochrome maker, which often participates in the e auction said that “In India the chrome ore rates are still at much higher level while the prices of its end product, ferrochrome has not gone up in the international market. The chrome ore rates dropped this time as buyers are unwilling to pay higher price.”
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