Global and Indian iron-ore prices were moving in opposite directions significantly changing the dynamics of the local markets and making India a net importer.

Indian export offers for high-grade iron-ore fines with an iron content of 63.5% and above, has been steadily falling over the past months from range of $97/t to $98/t in July to between $94/t and $95/t and to a low of $83/t and $84/t, with market expecting offers to seek the $80/t mark in absence of any significant buying interest from Chinese steel mills.

At the same time, the country’s largest miner NMDC has kept prices unchanged for the past three months at $75/t for high-grade lumps and $52/t for fines, as per a company announcement for September shipments, despite falling international prices.

Leading miner-exporters said that current level of export offers made overseas shipments of ore unremunerative after incidence of 30% export tax, a 15% increase in railway freight charges and the impending hike in royalty rates from 10% to 15%.

However, miner-exporters said that while overseas shipments have been falling, this did not result in any surplus in the domestic markets, but on the contrary shortages were emerging.

Local steel mills were not equipped to feed fines to the blast furnaces and the production of high-grade lumps, on which they were dependent, was falling as mines that had closed down on claims of illegal mining were slow in coming back into operation, even after courts have cleared them to resume operations.

“During the first quarter of 2014/15, India exported 2.25-million tonnes of iron ore compared to 3.10-million tonnes in corresponding period of previous year. Going by these estimates we expect total exports top fall to sngle digit figure of around eight- to nine-million tontones by close of current fiscal,” Federation of Indian Mineral Industries’ (FIMI’s) Hukum Chand Daga said.

“With delays in obtaining clearances, renewal of mining licenses deemed illegal by the courts were still be formalized and several mines were slow in getting back to production and hence imports were likely to be 15-million ton during the current year making India a net importer of the raw material,” Daga said.

Import increased from 1.9-million tonnes in 2010/11 to three-million tonnes in 2012/13 but fell sharply to 400 00 t in 2013/14 on improved supplies.

However, supply-side pressures would be aggravated by closure of 12 operational mines in eastern Indian province of Jharkhand earlier this month, though FIMI officials said exact impact of the closure was yet to be ascertained.