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Global turmoil in the iron ore market may have come as a blessing for India’s ore mining and pellet-making companies.
Iron ore prices surged this week, with the futures contract for the commodity hitting a two-year high on the Singapore exchange. This was on the back of news that Brazil-based Vale, the world’s largest iron ore and nickel miner, was staring at a massive supply disruption following a disaster.
India accounts for nearly 40 per cent of China’s import of ore pellets, data from industry tracker SteelMint show. Iron ore is a raw material for steel, and pellets are a refined product with high iron ore content
Vale, also a key supplier of ore pellets to China, slipped into a crisis after a dam in Brazil that was used by the company to dump its wet production waste suffered a deadly breach last week. The disaster led to around 20 million tonnes of mud piling up and killed hundreds.
This has led Vale to announce a 10 per cent output cut and decommissioning of 19 dams over the next three years. A 40-million-tonne cut in iron ore production from Vale is expected this year itself. The 10 per cent supply disruption is a big deal as Vale’s iron ore quality is very high, market experts told BusinessLine .
Shares of Indian companies, including Godawari Power and Ispat, Jindal Steel and Power, NMDC, Jindal Saw, Tata Steel and KIOCL have rallied by 5-20 per cent this week.
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