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A sustained demand from the domestic steel manufacturers will buoy iron ore production in this fiscal. Analysts are betting on five percent growth in output of the ore. In last fiscal year, iron ore output from all producing states totaled 213 million tonnes (mnt), marking a growth of 9% year-on-year.
It was after a gap of seven years that iron ore production had peaked beyond 200 mnt. The intervening years were in a phase of turmoil as states grappled with court ordered mining bans over illegalities in the activity.
Infrastructure and automobiles, the two key industries that absorb steel, will in turn firm up demand for iron ore. Aside from the projected rise in production, the accumulated inventory of iron ore will cater to the domestic demand. Odisha and Jharkhand, the two major producers between them, account for nearly 80 percent of the iron ore inventory piled up at mine heads.
Provisional estimates suggest that the stockpile of iron ore has reached around 150 mnt (as on June end). A robust outlook for production along with the stacked up iron ore gives the impression that the domestic market is oversupplied and puts to rest any speculation on shortages for the end user industries.
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