14 Oct 14

Economical Iron Ore Imports shift

JSW Steels Interest from Karnataka
E-auction
JSW Steel, top Iron ore purchaser at Karnataka e-auctions and having largest crude steel capacity of 14.3 MnT pa, has cut down its procurement from Karnataka in Q2
FY14 to 2.5 MnT; had purchased 2.9 MnT Iron ore in Q1 FY15.
The map below shows Q-o-Q comparison of JSW Steels reduced buying from Karnataka because of low cost imports. Supply from domestic market dropped and prices
increased, after mines closure in Odisha & Jharkhand. Iron ore purchase from the domestic market has fallen to 3.4 MnT in Q2 FY15, which was 4.8 MnT in Q1 FY15.
1
2.5
0.3
0.6
0.004
0.03
2.9
0.8
1
0.07
Q2 FY15 Q1 FY15
Total
Qty in MnT
Source: SteelMint Research
2
3.4
Imports 2
Grand Total
Karnataka
5.4
Total
Imports
Grand Total
Odisha Jharkhand Chhattisgarh Goa
4.8
Nil
4.8
JSW Iron ore Procurement in H1 FY15
Persistent fall in Chinese spot Iron ore fines (Fe 62%) prices that slipped to 5 years low
(USD 77/MT CNF China) has made imports quite economical along with Krishnapat-
nam, Mangalore and Dharamtar port facilities. Thus, 2 MnT Iron ore was imported last
quarter from zero in Q1 FY15.
In Oct14, JSW Steel is importing 0.2 MnT (Fe 67%) DR grade Iron Pellet from Vales 9
MnT pa Pellet plant in Oman. Material will be loaded at Sohar port and unloaded at
JSW Dharamtar port in Mumbai.
The landed cost of Pellet imported from Oman at nearly INR 8,200/MT is quite competi-
tive in contrast to nearly INR 8,250/MT from its prime domestic Pellet source, Mangalore
based KIOCL.
In Q3 FY15, imports may further beat domestic Iron ore buying as Chinese fines prices
are unforeseen to pick up behind low steel demand, poor economy and huge supplies
from worlds leading miners. To add, domestic supply shall continue to be short since
resumption of non-operational mines in Odisha and Karnataka has seen no development
so far.
Qty Type Price Origin Vessel name Unloading Port
Jul'14
169,585 Fines 94.5 South Africa Eurydice D Krishnapatnam
170,767 Fines South Africa Baltc Tiger Krishnapatnam
73,755 Lumps South Africa Jaigar Mangalore
148,225 Fines 87.2 Mauritania Eternus Krishnapatnam
Aug'14
165,001 Fines 98.8 South Africa Jens Warrior Krishnapatnam
86,450 Fines 92.2 South Africa G.L. Lapaz Krishnapatnam
82,240 Fines 94.4 South Africa Double Paradise Mangalore
86,519 Fines N/A
N/A
N/A
South Africa Gl Pirapo Jaigarh
174,137 Fines 96.3 South Africa Aquamarine Krishnapatnam
173,087 Fines 95.1 South Africa Bulk China Krishnapatnam
82,500 Lumps 113.6 South Africa Bulk Malaysia Mangalore
Sep'14
173,000 Fines 96.8 South Africa Cape Breeze Krishnapatnam
186,948 Lumps 104 Canada Martha Oldendor Krishnapatnam
71,324 Fines N/A South Africa Orsolina Botglieri Jaigarh
165,736 Fines N/A Brazil Angel II Krishnapatnam
Qty in MT
CNF Prices in USD/MT
Source: SteelMint Research
Provisional Data
JSW Iron Ore Imports in Q2 FY15
Country Wise
1.51 MnT from
South Africa
(76%)
0.18 MnT from
Canada (9%)
0.16 MnT from
Brazil (8%)
0.14 MnT from
Mauritania (7%)
Port Wise
1.6 MnT -
Krishnapatnam
port (80%)
0.23 MnT from
Mangalore port
(12%)
0.17 MnT
Jaigarh port
(8 %)
3
Month
N/A
N/A
N/A

N/A
N/A
N/A

JSW Iron Ore Purchase in Q2 FY15 (Jul-Sep'14)
Import
JUL AUG SEP
0.6 0.9 0.6
KARNATAKA
Total-2.5
Total
2
Total-0.3
Total-0.03
Total-0.6
Total-0.004
1.5 0.6 0.4
JUL AUG SEP
ODISHA
0.1 0.1 0.1
JUL AUG SEP
JHARKHAND
0.03 0.001 -
JUL AUG SEP
CHHATTISGARH
0.3 0.2 0.1
JUL AUG SEP
GOA
0.004 - -
JUL AUG SEP
4
Qty in MnT
Source: SteelMint Research
Krishnapatnam Port- JSW Steel
Dhamra Port- Tata
0.18 MnT
Fines
0.18 MnT
Lumps
0.07 MnT
Fines
SOUTH
AFRICA
CANADA
Jaigarh Port- JSW Steel
Haldia Port- Tata
Krishnapatnam Port
Tata International
0.02 MnT
Fines
0.02 MnT
Fines
AUSTRALIA
0.16 MnT
Fines
0.16 MnT
Fines
BRAZIL
5
India imports 0.8 MnT Iron Ore in Sep14
Indian Iron ore imports in Sep14 fell by 20% (M-o-M) from 1.01 MnT in Aug14 to 0.8 MnT
JSW Steel was the largest importer (0.6 MnT), followed by Tata International
Apart from Australia & Brazil, steel giants have also started importing Iron ore from Canada & South Africa
Krishnapatnam port is turning out to be a major port for Iron ore import because of less waiting period and good availability of rakes
Source: SteelMint Research
Iron Ore Exports from India in Sep14 fall by 35% M-o-M
Iron ore exports from India in Sep14 fell by 35% (M-o-M) from 390,235 MT in Aug14 to 252,500 MT
Already burdened with expensive plot rent at various ports, 30% export duty and high freight charges, constant drop in Chinese fines
prices have left exports absolutely nonviable
NMDC, which has long term agreements with Japanese & Korean steel mills, remains the largest exporter and exported 0.22 MnT ore
Majority of shipments took place from Vizag port (215,000 MT) followed by Paradip port (37,500 MT)
Indian Iron ore exporters, who had stocked 26,000 MT fines (Fe 56-58%) for export from Haldia port, are currently looking for domestic
buyers because of constant fall in Chinese spot Iron fines prices
Ports such as Haldia, Panji, Dhamra, Gangavaram, Krishnapatnam, Mundra, Karaikal, Kakinada, Manga-
lore, Goa, Ennore and Pipava have been considered but no Iron ore export were seen in Sep'14. Redi port has
not been considered.
Qty in MT
Provisional data
Source: SteelMint Research, Port Sites
Shipper
MMTC
Bagadiya Brothers
Jagwani
Grand Total
Vizag Paradip Total
215,000
-
-
-
28,000
9,500
215,000
28,000
9,500
215,000 37,500 252,000
Route
Indian East Coast to China
Brazil to China
South Africa to China
Vessel Type Freight
Supramax
Capesize
Panamax
12.5
18.3
15.9
Vessel Freight
Freight in USD/MT
Source: SteelMint Research
6
Major miners in Odisha namely Rungta Mines and Essel Mining have held their offers unchanged
Another miner which is offering raw material both within & outside Odisha is Ghanashyam Misra & Sons
All prices are as per loaded into wagons & including royalty
Source: SteelMint Research
Prices in INR/MT, loaded into wagons & including royalty
Source: SteelMint Research
Odisha
Miners hold Iron Ore Prices
Indian Iron Ore Prices (INR/MT) in Sep'14
Miners State Grade/Fe 5- - 18 mm Grade/Fe 10 30 mm Grade/Fe Fines
Rungta Odisha
Odisha
63 7,100 63 6,350 63 3,200
Essel 63 6,775 63 6,025 63 2,975
Indrani Patnaik Odisha 62 6,100 62 5,100 62 3,100
Ghanashyam Misra & Sons Iron Ore Prices
Size (mm) Grade (Fe%) Prices
10-40 65 6,000
10-40 64 5,850
5-18 63 6,200
10-40 63 5,700
5-18 60-59 5,200
10-40 59 4,700
5-18 57 4,700
10-40 58-57 4,200
Fines 57-59 1,900-2,100
Prices in INR/MT on ex-mines basis including royalty
H-1 bids for Q3 FY15 (Oct14-Dec14)
Source: SteelMint Research
OMC to sell Iron ore through national e-auction conducted by MSTC
OMC signed MoU with Odisha based miners for long term raw material linkage so as to assure them of ore supply
OMCs Daitari tender for sale of sized CLO & Iron ore fines available at Daitari region was called off after Electrosteel Steels (H-1 bidder) was ascertained to be an Iron
ore lease holder. The discrepancy arose because as per norms of OMC, lease holder cannot participate in the bidding process
OMCs Iron ore tender for sale of 61,500 MT had fetched high bids and H-1 bids increased by INR 3,00-2,000/MT over Q2 FY15 prices
Type Mines
Quantity
(MT)
H-1
Bids
Bidders
Q2 (Jun
-Sep) Prices
Change
Barbil
1040 mm, (Fe:
+62%) 5,000 5,051
Anjani Steels
(Chhattisgarh) 4,595 460
Gandham
ardan
1040 mm, (Fe:
+62%) 10,000 4,701
Anjani Steels
(Chhattisgarh) 4,059 650
Gandham
ardan
1040 mm, (Fe:
+62%) 3,000 4,651
Anjani Steels
(Chhattisgarh) 3,303 1,350
Gandham
ardan
10180 mm
(Fe: +65%) 2,000 3,811
Priti Pragyan Minerals
(Odisha) 3,505 305
Gandham
ardan
518 mm (Fe:
+64%) 1,500 5,551
Anjani Steels
(Chhattisgarh) - -
Koira
1040 mm, (Fe:
+62%) 40,000 6,209
Prakash Industries
(Chhattisgarh) 4,250 2,000
Total 61,500
OMC
Odisha HC allowed RP Sao for dispatches of stocked Iron ore at mines head located in Barbil, for which it had received good response and sold around 1 MnT of stocks
RP Sao Mines
Hearing for review petition of Odisha 50:50 sales rules held at Odisha HC was conducted on 12 Sep, 2014; the hearing has been postponed till 20 Oct, 2014
Odisha 50:50 Rule
8
Chhattisgarh
NMDC rolls over Iron Ore Prices for Oct14
NMDC Iron Ore Prices for Oct14
NMDC, Indias leading miner with 30 MnT annual production, has rolled over Iron ore prices for Oct14
The miner had produced about 2.3 MnT Iron ore and sold 2.27 MnT in Sep14 (includes sale of 0.5 MnT ore via Karnataka e-auctions)
NMDC had dispatched 347 rakes in Sep14, which decreased by 14% (403 rakes in Aug14) in comparison to last month
NMDCs e-auction held on 7 Sep, 2014 for 180,000 MT Iron ore from Chhattisgarh mines has fetched high bids
Material Type Grade (Fe) Size (mm) Prices (INR/MT)
DR CLO 67 10-40 5,390
Baila Lump 65 6-40 4,600
Baila ROM 65 10-150 4,030
Fines 64 0-10 3,160
Prices in INR/MT on ex-mines basis including royalty
Source: SteelMint Research
* Bid prices are as per sources; company officials have not given any confirmation regarding this
All prices are basic in INR/MT. Royalty @15% and other taxes extra
(B) -Bacheli; (K) - Kirandul
Ore Type
Qty
(MT)
Base
Price
Bid Price*

Bidders

DR CLO (B) 20,000 5,390 5,651-5,661 Mahendra Sponge, Gopani Sponge,
Vandana,Sunflag
Baila ROM
(B)
20,000 4,030 NA NA
Baila Lumps
(K)
40,000 4,600 4,635 Tata Sponge, BS Ispat
Baila Fines
(B)
60,000 3,160 3,354 Tata Steel
Baila Fines
(K)
40,000 3,160 3,344 Tata Steel
9
Qty in MT
Source: SteelMint Research
Qty in MT
Source: SteelMint Research; Government Websites
Note: Grade & bid prices are weighted average
Jharkhand
Rungta Mines raises Iron Ore Fines Prices by INR 200-250/MT
Rungta mines has increased Iron ore fines prices from Jharkhand by INR 200-250/MT; Fe 63% fines is at INR 3,750/MT (loaded to wagons)
On 05 Sep, 2014, District Mining Officer (DMO) of Chaibasa (Jharkhand) had ordered 12 ore mines (11 Iron ore & 1 manganese ore) to cease operations as they
were running under 2nd & 3rd subsequent deemed renewal
The effect of mines closure on Indian domestic market is less as captive miners have sufficient stockpile and Iron ore imports to India are economical
Jharkhand government following the SC decision has asked 11 banned Iron ore mines to pay amount of Iron ore extracted from the mines from the expiry date
of lease to date of current renewal
Karnataka
Top 3 Iron Ore Buyers in Sep14
Iron Ore Sales in Sep14 hit by Import Viability
In Sep'14, total Iron ore sales amounted to 1.45 MnT against 1.37 MnT in Aug14; NMDC sold 0.6 MnT via Karnataka e-auctions
JSW Steel was the largest buyer with 0.6 MnT followed by Slv Steels & Alloys and BMM Ispat
Floor & bid prices for lump (Fe 62%) were firm at INR 3,980/MT & INR 3,990/MT respectively (M-o-M)
Floor & bid prices for fines (Fe 60%) stood at INR 2,646/MT & INR 2,648/MT respectively, with an increase of INR 100/MT in floor price (M-o-M)
Mines Bid Qty Allotted Qty
NMDC 716,000 616,000
Other Mines & Stockyards 856,000 836,000
Total 1,572,000 1,452,000
Company Fines Sub Grade ROM Grand Total
JSW Steel 428,000 208,000 - 636,000
Slv Steels And Alloys - - 150,000 150,000
BMM Ispat 128,000 - - 128,000
10
Lumps
Chinese Spot Iron Ore Fines lose USD 32/MT since Apr14
Chinese spot Iron ore fines prices have slipped to 5 years low in Sep14 owing to huge Iron ore supplies from Australia & Brazil in last few months
China
Worlds Leading Miners Iron Ore Production (MnT)
Miner

2013

2014 (E)

After 2015 (E)

Rio Tinto 266 295 360
BHP Billiton 225 245 290
Vale 299.8 360 450
FMG 125 160 -
11
Iron Pellet Prices surge in Odisha
The average price for Fe 62% spot Iron ore fines in September, 2014 was USD 82/MT CNF China, which is down by USD 10/MT in comparison to Aug14
Chinas manufacturing sector witnessed a fractional improvement in operating conditions and HSBCs China final Purchasing Managers Index (PMI) stood at 51.1
Pellet prices in Barbil which had increased to INR 7,800/MT (loaded) in the start of Sep14 remain firm. Economical Pellet offers from international suppliers have
restricted prices to rise further and scarcity of Iron ore fines has effected Pellet production
Currently, East India Pellet producers are struggling for Iron ore. JSPL is in discussion for immediate delivery of DR/BF grade Brazilian Pellet and Iron ore from South
Africa and other prospective countries. It has already imported 20,000 MT South African fines at Paradip port
KIOCL had floated tender for domestic sale of 0.2 MnT BF grade Pellet on 25 Sep, 2014 for which prices remain constant at INR 7,750/MT ex-works Mangalore for Oct14
KIOCL to export 55,000 MT Pellet to Iran for the first time; vessel name MV HAMGAM
Pellet movement through railways had declined (M-o-M) by 27% in Sep14 (60 rakes ), from 83 rakes in Aug14
12
Mill Scale
In Sep14, 50,500 MT Mill Scale was exported to China against 36,000 MT in Aug14. Continual fall in Iron ore fines prices in China has pushed exporters to release
the buildup stock; alterations in fines prices directly effects Mill Scale offers
Majority of shipments took place from Kandla port (29,000 MT) followed by Chennai port (21,500 MT)
Exports from India in Sep14 up by 40% M-o-M
Mill Scale Exports in Sep14
Mill Scale, generated from rolling mills, is an exportable and finished material with high grade (Fe 68-70%) and density. It is free from export duty and
differential based charges (DBC).
In an auction, Jindal Steel & Power (JSPL) has invited bids for sale of around 2,000 MT Mill Scale from its Patratu plant located in Jharkhand.
Meanwhile, Monnet Ispat & Energy (MIEL) has also invited bids for sale of 250 MT Mill Scale laying at Raipur (Chhattisgarh) plant.
Export
Date
Vessel Name Qty Price
Destnaton
Country
Destnaton
Port
Indian
Port
Shipper Name
25-Sep-
14
Great Royal 21,500 73-74 China Qingdao Chennai
Independent
mineral, Kineta
Global
18-Sep-
14
- 1,999 88 China Nantong Kandla -
17-Sep-
14
Propel
Progress
27,000 88 China Jiangsu Kandla Space Exim

Qty in MT
FoB Prices in USD/MT
Source: SteelMint Research
Exports till 25th Sep14
13

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l
Mill Scale (Fe 70/68%) Prices
Domestic Prices (Basic) in INR/MT
* FoB price in USD/MT
**CNF price in USD/MT
Source: SteelMint Research
Places Prices
Raipur 3,500
Vizag 3,860
Kandla 3,670
Chennai 3,640
India Export* 81
China Import** 91