Iron ore price decline temporary in nature : JSW Steel

Industry News 2010-08-23 10:38:52

Source : News Center

Published : Aug 11, 2010

Spot prices of iron ore fines are down to Rs 1,500 a tonne levels, a plummet of 20-25%. But Seshagiri Rao, Joint Managing Director and Group Chief Financial Officer, JSW Steel says this decline, which is a result of lower demand from China is only temporary in nature. “The import of steel in India is increasing every month,” he adds.
Q: Could you explain through what categories and what kind of sellers of iron ore your price points have been reduced quite dramatically following the Karnataka ban?
A: We should not look at this from a point of the ban of iron ore by the Karnataka government. It has to be looked at from a wider perspective that the iron ore exports have been increasing consistently from India from 33 million tonne in 2000. Last year we exported 117 million tonne. It is 3.5 times.
Another very important point is that out of the total production in 2000, private miners were representing only less than 40% whereas today it is almost two-thirds. What is relevant here is the companies which are adding value to the raw materials they are not being given preference by allocating iron ore.
This natural resource we are exhausting quickly and increasing the production and exporting. That is what is relevant. It is only temporary where the prices are coming down or going up. We have to look at from that perspective whether we should conserve our natural resources and use it for the value addition within the country or we export and import steel. That is what we really need to understand. 
Q: Even so can you give us a sense of the price decline that you have seen over the last few months in terms of where they were trading at and at what levels they are at right now?
A: Iron ore prices internationally have declined. It went up as high as USD 185 cost and freight (C&F). They came down as low as USD 110 per tonne. Majorly the demand from China has declined starting from May so the prices have corrected. It is not only unique to India where iron ore prices have come down.
Because of the demand-supply dynamics in the steel industry and iron ore industry the prices have got declined. We are seeing again a small spurt which is happening in the last few days where iron ore prices started going up again. Buyers are coming into the market. That is what we are seeing in the market situation right now.
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