Economy

Steel cos, iron ore miners spar over exports to China

Suresh P Iyengar Mumbai | Updated on January 11, 2021

Question patriotism of each other

The tussle between iron ore miners and steel companies over exports to China has taken a political turn with both sides questioning each other’s patriotism.

In a fresh missive to Prime Minister’s Office, the Federation of Indian Mineral Industries (FIMI) said it is very unbecoming on the part of Indian Steel Association (ISA) of doubting the patriotism of the iron ore industry for exporting maximum quantity to China when the steel industry itself is trading with China.

Some of the primary steel producers, who are recommending a ban on iron ore exports, exported 7.52 million tonnes (mt) of iron ore last October and November besides 10.63 mt of pellets illegally, last fiscal. Only State-owned Kudremukh Iron Ore Company is legally allowed to export pellets. The fact that the primary steel producing companies are exporting iron ore indicates that there is no shortage of iron ore in the country, it said.

Of the 33 mt of iron ore exported between April and October this fiscal, a total of 19 mt are of less than 58 per cent iron content while Indian steel producers use ore with an average 63 per cent iron content.

Earlier, ISA wrote a letter to the PMO claiming that iron ore miners had directed about 92 per cent of their exports to China between last April and August when India and China had a violent border stand-off in eastern Ladakh and when Chinese products were subject to a barrage of restrictions.

FIMI said while the domestic iron ore prices have increased by ₹1,950 a tonne to ₹4,110 in the last six months, steel prices were have gone up by a whopping ₹16,700 a tonne to ₹51,590 in the same period.

 

Domestic prices

Srivats Ram, MD Wheels India, said while over 20 per cent increase in steel prices is a major concern, the frequency of changes in prices, especially in long products is an issue.

“Such frequent steel price revisions has bought in a high degree of uncertainty in business planning especially for exports that have prices contracted for a period,” he added.

While the steel industry gets high grade iron ore from domestic sources, it benchmarks domestic prices to the international market. Moreover, almost all the primary steel producers have captive iron ore mines and hide windfall profits reaped, said the FIMI letter.

Of the 1,400 mt reserves meant for both captive and non-captive miners auctioned in Odisha, end users have bought over about 82 per cent of the reserves. Out of this one single major steel company itself has garnered major chunk of 59 per cent or 1132 mt of the total resources auctioned.

Published on January 11, 2021

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