Iron ore prices are likely to fall 10-15 per cent in two months, due to slowing demand from steel mills in India and abroad, with the onset of monsoon.
Mining and transportation of minerals halt in this period in most Asian countries, with mills using raw material from their inventory. Only pending and need-based orders are met during this period. The demand for ore declines 70-80 per cent due to waterlogging in mines and blockage of roads.
“Iron ore exports are facing delay in permission from the Karnataka government despite the Supreme Court ordering a lifting of the ban on April 20. By this time, the state government should have allowed exports. Although it has hinted at allowing exports in the next week, miners and traders may not get the benefit this season, as ports have started shutting operations gradually,” said R K Sharma, secretary-general of the Federation of Indian Mineral Industries (Fimi).
The monsoon rainfall began a week ahead of the normal schedule this year, halting shipment from Goa, India’s largest exporter of low-grade iron ore. The state contributes 40 million tonnes of India’s 100 mt of annual exports.
“Goan ports have halted plying of ships,” said Glenn Kalavampar, secretary, The Goa Mineral Ore Exporters Association. He forecast an 80-90 per cent decline in exports this monsoon.
On Monday, iron ore lumps for the benchmark 63.5 per cent of iron content are quoted at $176 a tonne for delivery on Chinese ports. Early this year, it was quoted at $190-200 a tonne, when China was doing a lot of stockpiling. Chinese orders are thin on Monday. Small and mid-size steel mills there await price stabilisation. According to Mysteel.net, a leading portal dedicated to steel and raw materials in China, the imported iron ore market is continuing to decline. India exports nearly 90 per cent of its low-grade ore to China.