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The mystery behind rising iron ore prices - The Financial Express

 

The mystery behind rising iron ore prices

In FY20, India’s iron exports rose 133% to 37.69 million tonnes versus FY19 levels. And over 80% of these exports went to China. In crux, India’s domestically produced iron ore was serving the needs of another market before catering to its own

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The mystery behind rising iron ore prices

December 21, 2020 6:15 AM

In FY20, India’s iron exports rose 133% to 37.69 million tonnes versus FY19 levels. And over 80% of these exports went to China. In crux, India’s domestically produced iron ore was serving the needs of another market before catering to its own

 

India’s iron ore production over April-September 2020 stood at 47 million tonnes, witnessing a drop of about 50% versus last year.

By Ishaan Jain

 

Over the past couple of months, the steel industry has witnessed constant dialogue between iron ore miners and steel producers, aimed at reaching common ground on the availability of a key commodity for manufacturing steel—iron ore. While manufacturers of the alloy have gone up to the Prime Minister’s Office (PMO) seeking a ban on exports of iron ore citing sky-high prices, miners of the key raw material—whose pellets form about 60% of the cost of production of steel—claim that steel mills have been importing iron ore to suppress prices of the commodity despite huge stockpiles lying idle. Both sides have made sure to supplement their claims with data.

 

Industry associations, including the All India Induction Furnaces Association (AIIFA) and the Indian Steel Association (ISA)—representing both secondary and primary steel makers—have written separate letters to the PMO batting for a ban on iron ore exports.

 

 

Over April-July 2020, India’s exports of iron ore have risen by a massive 63%. This rise in exports is primarily fuelled by record steel production by the world’s largest steel manufacturer—China. Chinese steel output hit all-time highs in September, as state-backed investment in infrastructure projects took centre-stage amid the nation’s resurgence from the pandemic. This was further corroborated by an Edelweiss report which stated that iron ore imports in China surged 9% year-on-year in September 2020 and iron ore inventory at ports rose to 124 million tonnes from 105-110 million tonnes in July 2020. Consequently, miners including the NMDC have been exporting the iron ore owing to higher realisation for their produce.

 

The signs were already visible in FY20 as India’s iron exports rose 133% to 37.69 million tonnes versus FY19 levels. And over 80% of these exports went to China. In crux, India’s domestically produced iron ore was serving the needs of another market before catering to its own.

Aggravating the situation is the problem of non-operationalisation of merchant mines in India.

 

India’s iron ore production over April-September 2020 stood at 47 million tonnes, witnessing a drop of about 50% versus last year. Also, about 50% of the mines auctioned in Odisha this year went to large steel players for captive usage while majority of the remainder, which have gone to merchant miners, are yet to start production.

 

An industry estimate suggests that over April-September 2020, only 4.06 million tonnes of ore was produced from the auctioned mines. However, 93% of this production was done by JSW and Mittal for captive consumption. The mines were supposed to produce over 24 million tonnes during the period.

 

Another industry report states that only 12 merchant mines in Odisha are currently operational, while at least 20 are closed and all 11 merchant mines in Jharkhand continue to remain shut. This has caused a serious shortage of the raw material for the smaller steel producers in India’s domestic market. Due to this supply crunch, iron ore and pellet prices shot up by about 40% for six months starting March 2020. Steel manufacturers remain ready to pay a higher price, but availability of ore is still their top priority as alternative sources of the raw material, such as Brazil, continue to face supply tightness in the wake of Covid-19. The Odisha Mining Corporation (OMC) continues to be a beacon in these gloomy times, bringing relief to secondary steel producers by supplying the ore, albeit at higher than normal prices. Normalcy in prices and supply is expected to return in Q4FY21 and early quarters of 2022 when (hopefully) the vaccine starts getting administered to the masses.

 

But Indian miners, too, have their side of the story. In its counter-arguments submitted to the Ministry of Steel and the Ministry of Commerce in response to steel producers’ letters seeking a ban on iron ore exports, the Federation of Indian Mineral Industries (FIMI) states that “any shortfall in production due to Covid-19 pandemic in the eastern states can be made good by procurement of stocks lying at mine-heads. No mining lease holder would like to export if there is a domestic buyer. Currently, what is being exported is what is not being sought by domestic steel mills.”

 

The miners believe that since iron ore is produced in surplus in the nation, pellet producers and steel manufacturers choose to buy only grades with above 62% Fe content. There is export duty on exports of iron ore +58% Fe and if domestic producers are ready to purchase this iron ore, there would be no need to export.

 

Furthermore, the FIMI stated that iron ore stocks lying across mine-heads soared to 162 million tonnes during 2018-19, from 151.44 million tonnes in 2017-18. The rise has been constant over the past few years.

 

Whatever the case may be, domestic iron ore prices across grades have doubled from Rs 4,000 per tonne to Rs 8,000 per tonne on average, causing a spike in the cost of steel production. And the Ministry of Steel has been proactive in recognising this. The ministry understands how high steel prices can derail the nation’s growth by impeding the construction industry, which looks upbeat as the lockdown ceases.

 

While steel minister Dharmendra Pradhan has clarified that the government will not intervene in regulating prices since it is a matter of market dynamics, he has discerned supplies to be an area of concern. To tackle the issue, the Ministry of Steel is holding discussions with various concerned stakeholders. In fact, the ministry has already spoken to the Orissa Minerals Development Company (OMDC) on the supply issue. It is considering all possibilities, including a short-term ban on exports. The minister has also urged state governments to initiate some process in form of a policy framework to avoid supply chain disruptions.

 

While a temporary stoppage in exports of iron ore remains an option to stabilise the domestic market, other options include fixing iron ore rates or taking over closed mines by state or central PSUs. Whatever the choice may be, the actions must be quick as the industry has been reeling for a while now and desperately needs support of the government. As per one statistic, West Bengal has 64 iron and steel mills but not a single unit has more than 15 days of raw material stock available. An ominous December lies ahead if the changes are not implemented swiftly.

 

The author leads the Metal & Mining Sector, Invest India, the National Investment Promotion and Facilitation Agency of the government of India

 

철광석 가격 상승의 미스터리
2020 년 12 월 21 일 오전 6:15
FY20에 인도의 철 수출은 FY19 수준에 비해 133 % 증가한 37.69 백만 톤을 기록했습니다. 그리고이 수출품의 80 % 이상이 중국으로 수출되었습니다. 핵심에서 인도의 국내 생산 철광석은 다른 시장의 수요를 충족시키기 전에

2020 년 4 ~ 9 월 인도의 철광석 생산량은 4700 만 톤으로 작년 대비 약 50 % 감소했습니다.
Ishaan Jain 작성

지난 몇 달 동안 철강 산업은 철강 제조를위한 핵심 원자재 인 철광석의 가용성에 대한 공통점에 도달하기 위해 철광석 광부와 철강 생산자 간의 끊임없는 대화를 목격했습니다. 합금 제조업체는 철광석 수출 금지를 위해 국무 총리실 (PMO)로 올라갔지 만, 주요 원자재의 광부는 철강 생산 비용의 약 60 %를 차지합니다. -제철소는 막대한 비축량이 유휴 상태 임에도 불구하고 원자재 가격을 억제하기 위해 철광석을 수입하고 있다고 주장합니다. 양측은 데이터로 자신의 주장을 보완했습니다.

모든 인도 유도로 협회 (AIIFA) 및 인도 철강 협회 (ISA)를 포함한 산업 협회 (2 차 및 1 차 철강 제조업체 모두를 대표 함)는 철광석 수출 금지를 위해 PMO 타격에 별도의 편지를 작성했습니다.


2020 년 4 ~ 7 월 인도의 철광석 수출은 63 % 나 크게 증가했습니다. 이러한 수출 증가는 주로 세계 최대 철강 제조업체 인 중국의 기록적인 철강 생산에 힘 입었습니다. 중국의 철강 생산량은 9 월에 사상 최고치를 기록했습니다. 국가 지원 인프라 프로젝트에 대한 투자가 전염병으로 인한 국가의 부활과 함께 중앙 무대에 올랐습니다. 이는 2020 년 9 월 중국의 철광석 수입이 전년 대비 9 % 증가했고 항구의 철광석 재고가 2020 년 7 월 1 억 5 천 ~ 1 억 5 천만 톤에서 1 억 2,400 만 톤으로 증가했다고 Edelweiss 보고서에 의해 더욱 확증되었습니다. NMDC를 포함한 광부들은 생산에 대한 더 높은 실현으로 인해 철광석을 수출하고 있습니다.

인도의 철 수출이 FY19 수준에 비해 133 % 증가한 37.69 백만 톤으로 FY20에 이미 징후가 나타났습니다. 그리고이 수출품의 80 % 이상이 중국으로 수출되었습니다. 요점에서 인도의 국내 생산 철광석은 다른 시장의 요구를 충족시키기 전에 자체적으로 공급하고있었습니다.
상황을 악화시키는 것은 인도의 상인 광산의 비 운영 문제입니다.

2020 년 4 ~ 9 월 인도의 철광석 생산량은 4700 만 톤으로 작년 대비 약 50 % 감소했습니다. 또한 올해 오디 샤에서 경매 된 광산의 약 50 %가 대형 철강 업체에게 포로로 사용되었고, 나머지 대부분은 상인 채굴 자에게 전달되었지만 아직 생산을 시작하지 않았습니다.

업계 추정에 따르면 2020 년 4 ~ 9 월 동안 경매 된 광산에서 생산 된 광석은 406 만 톤에 불과합니다. 그러나이 생산량의 93 %는 JSW와 Mittal이 독점 소비를 위해 수행했습니다. 이 기간 동안 광산은 2,400 만 톤 이상을 생산할 예정이었습니다.

또 다른 업계 보고서에 따르면 현재 Odisha에있는 12 개의 상인 광산 만 운영되고 있으며, 최소 20 개는 폐쇄되고 Jharkhand에있는 11 개의 상인 광산은 모두 폐쇄 된 상태입니다. 이로 인해 인도 국내 시장에서 소규모 철강 생산 업체의 원자재 부족이 심각하게되었습니다. 이러한 공급 위기로 인해 철광석 및 펠릿 가격은 2020 년 3 월부터 6 개월 동안 약 40 % 상승했습니다. 철강 제조업체는 더 높은 가격을 지불 할 준비가되어 있지만 여전히 원재료의 대체 공급원으로서 광석의 가용성이 최우선 순위입니다. 브라질과 같은은 Covid-19의 여파로 공급 부족에 계속 직면하고 있습니다. Odisha Mining Corporation (OMC)은 이러한 우울한시기에 계속해서 등불 역할을하여 일반 가격보다 높지만 광석을 공급함으로써 2 차 철강 생산자들에게 안도감을줍니다. 가격과 공급의 정상 성은 FY21 4 분기와 백신이 대중에게 투여되기 시작하는 2022 년 초반에 회복 될 것으로 예상됩니다.

그러나 인도 광부들 역시 자신들의 입장을 가지고 있습니다. 인도 광물 산업 연맹 (FIMI)은 철광석 수출 금지를 요구하는 철강 생산자들의 편지에 대한 응답으로 철강 부와 상무부에 제출 된 반론에서“Covid로 인한 생산 부족 -동부 주에서 19 개의 유행병은 광산에있는 주식을 조달함으로써 개선 될 수 있습니다. 국내 바이어가있는 경우 수출을 원하는 채굴리스 보유자는 없습니다. 현재 수출되고있는 것은 국내 제철소가 추구하지 않는 것”이라고 말했다.

 

광부들은 철광석이 전국에서 잉여로 생산되기 때문에 펠릿 생산 업체와 철강 제조업체는 철 함량이 62 % 이상인 등급 만 구매하기로 선택한다고 믿습니다. 철광석 수출에 대한 수출 관세가 + 58 % Fe이고 국내 생산자가 철광석을 구매할 준비가되어 있다면 수출 할 필요가 없을 것입니다.

또한 FIMI는 광산에있는 철광석 재고가 2017-18 년의 1 억 5144 만 톤에서 2018-19 년 동안 1 억 6,200 만 톤으로 급증했다고 밝혔다. 상승세는 지난 몇 년 동안 계속되었습니다.

어떤 경우이든 국내 철광석 가격은 톤당 4,000 루피에서 톤당 평균 8,000 루피로 두 배가되어 철강 생산 비용이 급증했습니다. 그리고이를 인식하기 위해 철강 부는 적극적으로 노력해 왔습니다. 정부는 철강 가격 상승이 건설업 폐쇄로 인해 낙관적으로 보이는 건설업을 저해함으로써 국가 성장을 저해 할 수 있음을 이해하고있다.

Dharmendra Pradhan 철강 장관은 가격 규제가 시장 역학의 문제이기 때문에 정부가 가격 규제에 개입하지 않을 것이라고 분명히 밝혔지만, 그는 공급이 우려되는 영역임을 인식했습니다. 이 문제를 해결하기 위해 철강 부는 다양한 이해 관계자들과 논의를하고있다. 사실 국방부는 이미 공급 문제에 대해 Orissa Minerals Development Company (OMDC)와 대화를 나누었습니다. 단기 수출 금지 등 모든 가능성을 고려하고있다. 장관은 또한 공급망 중단을 피하기 위해 정책 프레임 워크의 형태로 일부 프로세스를 시작하도록 주 정부에 촉구했습니다.

철광석 수출의 일시적인 중단은 국내 시장을 안정화하기위한 옵션으로 남아 있지만 다른 옵션으로는 철광석 요금을 고정하거나 주 또는 중앙 PSU에 의해 폐쇄 된 광산을 인수하는 것이 있습니다. 어떤 선택을하든 업계가 한동안 휘청 거리고 있고 정부의 지원이 절실히 필요하기 때문에 조치는 신속해야합니다. 한 통계에 따르면 West Bengal은 64 개의 제철소를 보유하고 있지만 하나의 장비에 15 일 이상의 원자재 재고가 있습니다. 변경 사항이 신속하게 실행되지 않으면 불길한 12 월이 닥칠 것입니다.

저자는 인도 정부의 금속 및 광업 부문, Invest India, 국가 투자 촉진 및 촉진 기관을 이끌고 있습니다.

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