India's iron ore producers have reasons to cheer. Prices are inching up slowly and steadily and China is now buying iron ore at $50-60 per tonne from India, a good 25% jump from the bottom created in November last year.
Demand for the raw material hit lows last year in November when prices fell to $45 per tonne. Some time back, analysts predicted demand hurdles for miners as Chinese mills were expected to complete restocking and stop imports. That doesn't seem to have happened, with India not only registering good growth in exports to China, but also maintaining the momentum.
Last year, of the 160 million tonnes of iron ore mined in the country, 104 million tonnes went to China. Despite demand slump in the December quarter of FY09, domestic miners managed to sell 105 million tonnes till March 31. The country exported 12.6 million tonnes of iron ore in February, up 17% year-on-year. In March, this figure was at 11.6 million tonnes compared with 13.7 million tonnes in the year-ago period.
SBS Chauhan, adviser, Federation of Indian Mineral Industries, told DNA, "There is some demand but prices are a big factor. This year, too, we may touch 100 million tonnes of exports but prices are not even close to what they were last year."
He said ore prices have fallen by over 50% from last year's peaks. "Some of the miners had shut down mines for a brief period due to falling realisations. However, distress sale continued for whatever ore they had mined. Prices still aren't that high but business is going on," he said.
He added that benchmark prices for spot ore sales haven't been fixed yet.
Chauhan said at current prices, mining is unviable for the sector. "Mining and exports are on because miners don't want to break the continuity. But they aren't happy," he said.
Source: Daily News & Analysis, Mumbai
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