Singapore: India is likely to export 90-95 million tonnes of iron ore in the current fiscal year to March 2012, about the same level as the previous year, as domestic demand rises, an industry official said on Monday.
India — the world’s No. 3 iron ore supplier after Australia and Brazil — normally exports around half of its annual output of about 200 million tonnes, with the bulk of it going to top consumer China.
“We expect around 90-95 million tonnes, still below 100 million tonnes, almost the same as the previous year. Our own domestic demand is increasing,” R.K. Sharma, secretary general of the Federation of Indian Mineral Industries, told Reuters on the sidelines of an industry conference when asked about India’s iron ore exports for the fiscal year to next March.
But export had dropped in recent months due to a ban on shipments from the state of Karnataka and as India, the world’s fifth-biggest steel producer, feeds its expanding steel sector.
The Karnataka ban was lifted in April and Sharma said he expects some exports from the southern state to start by the end of June.
“The ban has been officially lifted but modalities are being worked out. Some iron ore exports may start by the end of this month,” he said.
The issuance of transport permits to exporters had been delayed as the Karnataka state puts in place infrastructure such as checkpoints and satellite tracking systems to prevent illegal mining.
But traders said the resumption of exports from Karnataka was unlikely to boost shipments out of India, particularly from the western coast, during the monsoon season which Sharma said could last through the middle of October.
“We can make up for the shortfall in the remaining months,” he said.
Traders expect tight Indian supply to provide support to spot iron ore prices, now trading at three-month lows below $170 a tonne as China’s steel demand slows during the seasonally weak third quarter.
Sharma said he expects India’s iron ore exports to remain around 100 million tonnes in the foreseeable future even if big steel projects, like South Korea’s Posco comes onstream.
“Every new steel plant, like Arcelormittal or Posco, they have been assured their own captive mines for iron ore so if they produce their own iron ore, then exports may not be affected to that extent,” he said.
“Also, I don’t find Indian demand for steel increasing to the extent that you will get exponential growth,” he said, citing private investment restrictions in the steel-intensive infrastructure and construction sectors.
Posco , the world’s third biggest steelmaker, has said it will proceed with a planned $12 billion steel plant in India despite hitting another snag after local protests for the eastern Indian state of Orissa to halt acquiring land for the venture.
Sharma agrees the project will go ahead.
“The state government is with them so there should not be a problem. It might be a short-term hiccup but they will get it ultimately,” he said.