Indian media has reported Odisha-based miners raising iron ore prices by up to 10 per cent as steel makers stock the mineral in anticipation of a supply disruption brought on by the expiration of multiple mine leases at the end of the fiscal year.
According to a report by JP Morgan, in spite of supply from the state hitting all time high, iron ore pricess have increased by Rs150 to Rs300 per tonne due to a combination of seasonal demand uptick and stockpiling of the mineral by still mills.
Observers believe that prices could further rise by as much as 15 per cent over the next three months given the high price differential between domestic and imported iron ore. Domestic iron ore prices are estimated around US$65 per tonne in comparison to US$85 to US$90 per tonne for imported ore.
State-owned NMDC, however, is yet to announce any price hike.
A direct consequence of a surge in iron ore price would be an increase in the price of steel. Domestic steel companies could raise prices by as much as Rs2000 per tonne over the next three months, JP Morgan said.
Leases of 17 non-captive iron ore mines in the country’s largest iron ore producing state are set to lapse on 31 March 2020. These mines collectively produce more than 60 million tonnes of iron ore annually – more than a quarter of the country’s total production. New lessees for the mines after reauctioning will need an array of clearances including Environment Clearance (EC) and Forest Clearance (FC), potentially delaying the resumption of mining.