Despite a short-term dip in demand, Indian iron ore exporters see a pick up in orders from Japan in the long term once the earthquake and tsunami-battered nation embarks on initiatives to rebuild the infrastructure.
Japan is the second largest market for Indian iron ore accounting for about five per cent of the total exports.
“There could be a decline in demand in the short term. However, we expect a pick-up in demand in the long term once Japan starts the rebuilding process,” said Mr R.K. Sharma, Secretary General, Federation of Indian Mineral Industries (FIMI), the apex body of iron ore producers and exporters.
Companies such as NMDC and Sesa Goa are among those which export to Japan. Goan exporters account for more than half of Indian exports to Japan estimated to be over 6 million tonnes a year.
“It is too early to comment on the impact. However, there have been no order cancellations,” said Mr S. Sridhar, Executive Director, Goa Mineral Ore Exporters' Association (GMOEA). “The steel mills in Japan are largely unaffected by the earthquake. Only one or two are affected. It is too early to say about the demand as people have not been coming to offices. If they require steel to rebuild, they will obviously need iron ore,” Mr Sridhar said.
Sources at NMDC Ltd said the company's long-term agreements (LTAs) with Japanese buyers are coming to an end this month. “LTAs are currently being worked out. Only once they are finalised, we will get a clear picture,” they said.