Benefiting from the increase in iron ore prices, Indian steel companies have raised steel prices again after 4 months

Release time：May 29, 2019 From：min

 Affected by the global market, major domestic steel producers in India have raised their ex-factory prices by 750 rupees/ton from February 1. This is the first time since October last year that domestic steel companies in India have increased their prices after four months. 

    According to JSW Steel, the price of Indian domestic steel before the price adjustment is about 42,000-4.4 million rupees per ton depending on the product. After this price adjustment, all steel products prices have risen by about 750 rupees / ton. 

    On a global scale, steel prices have risen due to rising prices of iron ore , an important steelmaking raw material . The global steel price of $40/ton has prompted domestic steel producers to raise prices in the domestic market, although Indian domestic iron ore prices are still weak compared to global iron ore. Due to the decline in production in China, global steel prices have been quite strong in recent years. 

    We remain optimistic about the prospects of domestic steel prices in India. At least in the next six months, the global trend is positive and the domestic market has great demand for steel. Seshagiri Rai, JSW's joint managing director and group chief financial officer, said at a performance briefing on Wednesday. 

    After the dam-breaking accident on January 25th, Brazil, one of the world's major iron ore exporting countries, the price of iron ore in the global market has risen steadily. Global industry demand is expected to rise from next week, which will support the positive price outlook for the industry. But in India, the situation is very different. In the past five months, miners including state-owned miners NMDC have been cutting prices. Since October last year, NMDC has cut the price by 30%. 

    Mining leases for domestic iron ore miners in Chattisgarh will expire next year, so miners are working hard to extract as much iron ore as possible. This has led to an oversupply in the market, putting pressure on domestic iron ore prices. 

    At the same time, the rating agency ICRA said that after the collapse of the tailings dam in Vale, Brazil, the supply of iron ore from Brazil was affected, and the safety measures for Brazilian mines are expected to be more stringent in the future. Due to the availability of sufficient iron ore inventories in India, the high probability of domestic iron ore prices in India will not rise sharply due to global events.

    India's domestic iron ore supply will exceed demand by about 25 million tons, and this oversupply situation is expected to continue until the 2020 fiscal year. At the same time, most miners' leases will expire in March 2020. 

    India's total iron ore demand in FY 2019 was 201.2 million tons, while India's domestic iron ore production was estimated at 210 million tons and imports were about 15.7 million tons. This has caused an excess of 24.5 million tons of iron ore in India this fiscal year. According to the ICRA report, Odisha's new production in the current fiscal year will far exceed the reduction in production caused by Goa. 

    In November 2018, NMDC announced that its Donimalai mine in Karnataka was temporarily suspended due to tax disputes with the local government. However, in the following three months, NMDC still reduced the price of its ore produced from the Chatisgarh mine by Rs 950/t and the lump ore price by Rs 1,250/t. The above declines include the NMDC's downward revision of Rs 200/tonne in February 2019 when global iron ore prices rose sharply due to the Brazilian dam failure. In the past few months, the price of iron ore in Orissa has also fallen.