Karnataka iron ore sales plunge 43% in H1FY’23; What to expect in H2?
Karnataka's iron ore sales in April-September, 2022 or the first half of the current financial year dropped by a sharp 43% to 8.9 mnt against 15.70 mnt seen in the same period of H1FY22. It may be mentioned that Karnataka was the second-largest iron ore producing state in India with over 40 mnt of production recorded in FY22. And the state has witnessed significant transitions post the SC orders.
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In these six months of FY23, NMDC Kumaraswamy, NMDC Donimalai, Vedanta, Ramamurthy Praveen Chandra, KSMCL and Sri Kumaraswamy Mineral Exports Pvt Ltd were the leading sellers.
On the price front, Lumps prices of Fe63% grade, from a peak of INR 4,800/t in May 2022, dropped to as low as INR 2,550/t in July, upped to INR 3,500/t in September. Fines of Fe60% grade, from a peak of INR 3,840/t in April this year, plunged to INR 1,950/t in July but recouped to INR 2,700/t last month.
Factors behind drop in sales in H1
Monsoons impact output
Less clarity on sales post SC order
Logistics confusion
What lies in store for H2?
In H2FY23, we may see the share of direct sales increasing as miners are trying to engage with buyers directly. With no Monitoring Committee in place now, all auctions are taking place via the MSTC platform and direct sales. However, currently, auction sales volumes of MSTC continue to be higher compared to direct sales. It was also heard that some buyers were looking to negotiate long term contracts with miners. Meanwhile, iron ore prices too seem to have bottomed out and there is less scope of price correction from here since steel prices may have bottomed out.
SteelMint is conducting a field visit to iron ore mines in Karnataka on 19-21st January in order to gauge the scenario from up close and monitor the changing dynamics of the mining industry in the state.
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