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India iron ore output likely to be sufficient to meet demand
Steel Insights
India’s iron ore production is likely to be in the region of around 200 million tons (mt) in 2020-21. In the previous fiscal of 2019-20 production was estimated at around 244 mt, according to industry experts.
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Odisha supplies
Total iron ore production from Odisha is likely to be in the region of 110 mt in 2020- 21, a shortfall of around 31 percent. Odisha’s production was estimated to be in the region of around 144 mt in 2019-20.
Delay in restarting of the auctioned mines in FY21 and excess production in the January and February period of FY20 from the mines, which were put up for auction, led to the variance in the production pattern.
Disruption in mining activity due to Covid-19 pandemic, slow restarting of the auctioned iron ore leases and the fact that these leases are yet to attain optimum production levels led to the fall in numbers from Odisha, said an industry source.
However, the supplies have improved from Odisha with production likely to be around 11-12 million tons towards the end of the last fiscal.
Meanwhile, some leading merchant miners have exhausted their annual Environmental Clearance limits which have put additional pressure on iron ore supplies from the state.
This could account for some dip in production in the current fiscal. However, operationalisation of most of auctioned leases by state PSU miner OMC is likely to cover up for any deficit thus caused.
Moreover, allocation of significant quantities from these mines at OMC auctions point to speedy dispatch of iron ore from these leases. Thus, Odisha’s share in total production is projected to stay over 50 percent in FY21.
Karnataka output
Karnataka is expected to record production of 35 mt in FY21.
The restart of NMDC’s Donimalai mine is expected to augment supplies. The Supreme Court has put an annual cap of 35 mt on iron ore production in the state.
Chhattisgarh/Jharkhand productions
Chhattisgarh is expected to produce around 35-36 mt of iron ore in FY21. Production from Jharkhand is anticipated to touch 20 mt in FY21, industry insiders said.
New mines coming into operation and enhancement of production from the auctioned leases are likely to further contribute to recovering supplies.
Prices firm on short term supply
In the meantime, domestic iron ore prices were firm due to paucity of lumps and highgrade ore in the market. Some merchant miners have exhausted their annual EC limit in Odisha.
However, overall supplies have increased since operationalisation of auctioned leases in the state. In addition, healthy steel margins are supporting iron ore prices.
NMDC has hiked prices in the beginning of April 2021 in conjunction with merchant miners.
In the Odisha market lumps prices averaged Rs 8,000-10,200 per ton for Fe 62/63 percent grade.
Fines prices have also increased and averaged around Rs 6,200-6,900 per ton for Fe 62/63 percent grade.
Serajuddin mine has resumed iron ore fines offers from its Balda iron ore block. The current offer price for Fe63 percent fines is heard at around Rs 6200 per ton including Royalty, DMF & NMET.
