KOLKATA (miningweekly.com) – Indian iron-ore production during last financial year has been provisionally pegged at an eight-year high, but the domestic market is plagued by the dichotomous dynamics of rising imports and unsold stockpiles across the regions.

According to preliminary industry estimates, iron-ore production during 2018/19 was around 208-million tons, surpassing the previous eight financial years.

Despite being the fourth-largest producer of the steelmaking raw material, imports surged 157% between April and December, at 11-million tons, as per the latest inward shipment data available.

The impact of the skewed demand-supply dynamics surfacing in the domestic market is being reflected in several private miners claiming mounting unsold stocks. For example, in Karnataka, miners have reported to be saddled with stocks of five-million tons as of last month, according to industry sources.

The increased domestic production of iron-ore is significant in view of the fact that iron-ore mines in Goa have remained closed since March 2018, on orders of the Supreme Court and Odisha, which accounts for half of country’s production, with a marginal rise to 101-million tons from 98-millions ton during fiscal 2017/18.

According to at least two southern India based miners, several large domestic steel mills are preferring imports resulting in unsold stocks at pitheads.

At the same time, local steel mills maintain that the surge in imports was largely owing to varying grades of iron-ore, depending on local geographies, and high logistical costs in transportation from pitheads to steel mill location. Further, a low import duty of 2.5% makes imported iron-ore cost competitive and, hence, the trend to use imported feedstock by many of the large steel mills, particularly in coastal locations, a private steel company official said.

Domestic miners are banking on changing dynamics in the global iron-ore market to ease pressures on rising stockpiles.

These miners reckon that, in the wake of the tailings dam disaster at Brazil’s Vale and cyclonic weather conditions impacting supplies from Australia’s Rio and BHP, global iron-ore supplies could tighten by around 33-million tons over the next few months. This should trigger a revival of interest in India's high alumina content iron-ore, which generally is of lower preference for Chinese steel mills.

“Indian iron-ore offers are seen to be consolidating above the $90/t CFR China mark and despite intermediate correction of the market, revived interest in high alumina content Indian iron-ore could boost outward shipment and ease pressures of stocks in the medium term,” an Odisha-based miner-exporter said.