With domestic steel prices tumbling to a 45-month low in August due to falling exports and rising imports, iron ore prices, a key steel-making raw material, have followed suit. While state-run NMDC, the country’s largest iron ore miner, is optimistic about a turnaround soon, others players in the fragmented sector see room for further price corrections.
Around 1.6 tonnes of iron ore is required to make one tonne of steel.
International prices of iron ore (62% Fe) have plummeted to the lowest levels in 20 months to $99 per tonne, due to a host of reasons, including a housing oversupply crisis, an economic slowdown in China and oversupply from major producing nations. Domestic prices also fell almost in tandem (not not steadily), to an eight-month low in August.
Federation of Indian Mineral Industries (FIMI) additional secretary general B K Bhatia, said, “Iron ore prices have tumbled to around $100 per tonne (CFR China) from its peak of $140 a tonne in January this year. The recent downturn in global prices is primarily due to subdued demand in China. It has also rendered
Indian low-grade exports unviable. Unless demand in China picks up, the prices will remain subdued.”
The slump in ore exports could have a significant bearing on India’s overall goods shipments, where the commodity is a significant constituent, and the trade and current account deficits.
