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[Ferro-Alloys.com] India’s top steelmakers complained their production for the quarter ended September was affected due to a shortage in availability of iron ore and several steel industry bodies have petitioned the commerce ministry to address the issue.
“Production was flat on a year-on-year basis, production volumes could not be increased due to shortage of iron ore. Otherwise the production could have been much better and sales, even better,” said Seshagiri Rao, joint managing director, JSW Steel NSE 0.52 %.
Despite increased utilisation levels and good demand, the company’s production levels were held back to a shortage of iron ore in the market, Rao said.
While the secondary steel makers were the most affected, some top steel makers have also seen production capped.
“Iron ore production in Odisha was 50% lower this quarter to 35mt. We are trying to maximize our captive mines, it can be ramped up, but there are several logistical issues going on now,” said JSW Steel’s Rao.
Operating costs were down primarily on account of lower prices of imported coal, better operating leverage and savings in procurement costs and fixed overheads. However, this benefit in cost was partially offset by increase in the iron ore prices, JSW Steel said.
Yet another top steel player confirmed that the production was hit due to the iron ore shortage. The company that did not wish to be identified said the benefit of better demand and the hike in steel prices could not be reaped fully as iron ore prices shot up.
India’s April to July 2020 iron ore production shrunk 50% from last year and the Indian Steel Association (ISA) sought a ban the export of iron ore for the survival of secondary steel producers. As per ISA’s letter, April-July exports of iron ore jumped 63%.
“Iron ore exports have reached new highs in the last two months on the back of strong demand from China.
In FY20, India’s iron ore exports rose to 37.69 million tonne from 16.15 million tonne in 2018-19, a jump of nearly 133 per cent,” ISA’s letter to the commerce ministry said.
State-owned iron ore producer NMDC said that it is trying its best to increase production to fight the shortage.
“Further, NMDC is committed to surpass the production of previous financial year with increased production from Bailadila Mines in Chhattisgarh and likely resumption of operations in Donimalai Mines in Karnataka in the ongoing financial year,” said Sumit Deb, CMD, NMDC
However, Secretary General of Federation of Indian Mineral Industries (FIMI), RK Sharma reached out to the prime minister’s office (PMO) office in a letter highlighting the surplus iron ore in the mine heads. FIMI said steel companies and other sponge iron makers are 'choosy' and are using only high grade (+68%) iron ore, while the other grades are in excess.
“The total requirement of iron ore by steel and sponge iron industry in the country is around 165 million tonnes, as against a production of 206 million tonnes as of 2019,” said FIMI in its letter dated 17th October.
Source: Economictimes
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