India's Iron Ore Exports Tumble in Oversupplied Global Market

---

Researched by Industrial Info Resources India (Delhi, India)--India, which has been ranked among the leading exporter of Iron Ore, is now about to turn into a big importer due to a slump in the domestic production, primarily caused by a series of restrictions imposed on mining and mine closures in the country. The federal and state governments have imposed mining restrictions in the southern coastal state of Karnataka, western state of Goa and recently in the states of Odisha and Jharkhand states in eastern India.

Mining in the key iron ore producing states-- Karnataka and Goa was banned during 2011-12. Since then several mineral rich mines in Odisha and Jharkhand faced closures due to the government-imposed restrictions on the renewal of mining licenses. Closures of operational mines are creating massive supply constraint in the domestic market.

These disruptions have cut India's iron ore production to 152 million tons (MT) in 2013-14, from about 218 MT recorded in the year 2009-10, according to the Indian Bureau of Mines. It is estimated that India may need to import about 45 million tons of ore over the next three years to meet its domestic demand.

Further, high cost of production of iron ore is also a major driving force for the shift in sourcing of raw material. In Odisha, 63%-grade iron ore would cost about $105 a ton, including taxes and the royalty to export, way above the current global market price of $67-$68.

India has imported only about 0.37 MT of steel making raw material in 2013-14, while one of the steel giants Jindal Steel Limited (JSL) (BSE: 532286) (New Delhi), which fully met its raw-material requirement from domestic supplies, has firmed its plan to import about 6 MT of ore in the current 2014-15 financial year.

The prospect of higher demand from India comes at an opportune time for global iron ore miners, whose margins have been shrunk by a 40% slump in iron ore prices this year. Iron ore fell to $81.9 a ton during the second week of this month, its lowest since September 2009. The bulk of India's imports may come from Australia and South Africa.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.