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Surge in international iron-ore prices changing Indian market dynamics

The sharp rebound in international iron-ore prices over the last month is changing dynamics of the Indian market, with imports of the steel-making ingredient surging and local miners hiking prices.

India’s largest miner, the government-owned and -operated NMDC has increased the domestic sales price for deliveries in December by 13% for high-grade iron-ore lumps to Rs2 968/t ($46/t).

The domestic price for iron-ore fines was increased 10% at Rs2 486/t ($39/t).
NMDC has justified the increase in domestic iron-ore prices during the past 13 months on the sharp surge in international prices.

The export price of Indian high-grade iron-ore fines, Fe content 63.5% and above, have spurted to about $70/t CFR China, up from about $62/t CFR China a month ago, and $56/t CFR China six months ago. Local traders are forecasting export prices to hit the $83/t-mark in January 2017.

NMDC sources has said that though the miner benchmarked its domestic price to average international price during the previous month, its pricing strategy is not based on strict import parity prices as it attempted to keep its domestic sale price at least 30% lower than landed price of imports at eastern Indian ports and 15% lower than landed price at western ports.

Taking quick cue from the largest miner, private miners in the eastern Indian province of Odisha too have hiked their ex-stockyard price ranging between 13% and 17%.

The sharp changes in the domestic price regime, in turn, has triggered a resurgence of imports of iron ore raw material into the country.
Although government data on November import shipments was yet to be made available, traders tracking port movements have said that inward shipment of the raw material was estimated to be up 40% during November on month-on-month basis, with some traders estimating volume shipment during the month to have exceeded the one-million-ton mark, with the bulk sourced from South Africa.

In view of the high prices and rising import shipments, steel producers are moving to petition local and federal government seeking a relaxation of the Supreme Court imposed cap on iron-ore mining in southern Indian province of Karnataka from 30-million tons a year to 33-million tons a year.
Source: Mining Weekly

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