Comments
Japan's steel industry may have got dented by last month's tsunami disaster, but its appetite for iron ore, the crucial raw material for steel making, is not down.
Although the Japanese Steel Mills, a consortium of Japanese steel makers, will not be able to immediately import iron ore, it is keen on reviving the five-year import contract with National Mineral Development Corporation at the earliest. The five-year contract between NMDC and Japanese Steel Mills expired on March 31, 2011.
NMDC exports about 15 per cent of its production mostly to Japan and China.
“Japan is keen on buying iron ore. We have submitted a proposal (for a new contract) that was approved by the Group of Secretaries and will now go before the Cabinet for approval,” Mr Rana Som, NMDC Chairman and Managing Director, told Business Line .
NMDC's contract with Japanese Steel Mills was on an annual basis for the first four years and changed to a quarterly pricing system in 2010-11, in line with the iron ore miner's shift to a new pricing mechanism for all buyers.
The Japanese steel industry, which consumes about 130 mt of iron ore annually, had been disrupted by the massive tsunami.
Reports from Japan indicate that about 15 mt of annualised steel production capacity could have been affected by the calamity. Japan's steel production was estimated at about 110 mt last year.
Industry analysts say that Japan is keen on building up stocks of the raw material to feed its steel mills when they resume production, as part of its reconstruction exercise. Analysts estimate that six months down the line, Japanese steel industry will begin to consume higher quantities of iron ore, as steel production picks up.
Although NMDC hiked prices of ore lumps by 10 per cent provisionally for the April to June 2011 quarter, without changing the rates for fines, it is expected that spot prices of the ore will continue to fall for the next few months in the wake of the Japan disaster.
Spot prices for iron ore fell to $170 per tonne in the immediate aftermath of the tsunami, after the mid-February peak of $200 a tonne.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.