India’s beneficiation of low-grade iron ore could result in new trade patterns

India's push toward the beneficiation of low-grade iron ore could result in new trade patterns emerging in the future if implemented, market sources told Fastmarkets this week

It could mean a higher acceptance among buyers of Indian iron ore in the seaborne market, especially if they are substantially superior to what was being exported in the past, they said.

India is looking to mandate that at least 80% of iron ore below 58% Fe produced by a mine leaseholder should be beneficiated to at least 62% Fe, according to a consultation notice published by the country’s Ministry of Mines.

Any shortfall will be assessed on a quarterly basis and the lessee will then pay royalties to respective state governments on the difference between the minimum and actual quantity actually beneficiated.

The state governments may also choose the terminate the lease of a miner if it is deemed as not being able to maintain the minimum quantity of ore to be beneficiated.

Asia could be more accepting of the upgraded Indian ore compared with Europe, a major iron ore buyer in China told Fastmarkets.

“Asia is more used to Indian ores, especially China. Europe is not used to iron ore from India and would want to know its quality first. The stability of supply and logistical issues will also need monitoring,” he said.

But it is also generally hard to forecast any trade flow until the quality of the mid-grade ore is known, a trader in Singapore told Fastmarkets.

“China is used to processing low-grade Indian pellets, but no one knows the quality of the new higher-grade ore,” he said.

A second Singapore-based trader said if the quality matched those of standard iron ore concentrate, then it would only be a matter of adjusting pricing for it.

“There will be appetite for it if the specifications are fine,” he said.

An industry source in the Middle East said that alumina content in beneficiated ore is a key factor.

“With increasing alumina content in Australian ore already becoming a concern, Indian ore with high alumina content may not be a desired product,” the source told Fastmarkets.

An iron ore industry source in Singapore has doubts about India being a sustainable long-term supplier of high-grade iron ore.

“There are costs involved in this. For example, new capital expenditure to set up beneficiation and concentration plants, so it’s not likely that every miner will be able to do it,” he said.

This could also make private Indian miners gradually withdraw from the market if they are not able to compete on cost, a third trader in Singapore said.

“They will not find it economical to remain in the business,” he said.

Indian miners now face a hefty 50% tax on exports of iron ore fines, lump and concentrate and a 45% tax on exports of iron ore pellets.

These were imposed from May 22 this year to curb inflation and increase supply within India.

The move caused liquidity of lower-grade Indian pellets to vanish from the spot markets in Asia.

But there is also the possibility of the beneficiated ore remaining in India for local consumption.

“If the ore is upgraded, then the cost of steel in India will be lower [because there will be more local supply],” the third trader in Singapore told Fastmarkets.

This would make Indian steel more competitive in the international market, he said.

What to read next
Fastmarkets has clarified the specifications of its copper grade A cathode and non exchange-deliverable equivalent-grade (EQ) copper cathode premiums, to avoid any confusion regarding the deliverable status of its copper cathode assessments.
Fastmarkets confirms the amendment of five of its steel products assessments and steel billet index originated from the Black Sea.
The US steel industry’s preponderance of electric-arc furnace (EAF) capacity may be a double-edged sword when it comes to collecting green steel premiums, market sources have told Fastmarkets
Fastmarkets proposes to amend the payment terms and quantities of three hot- and cold-rolled coil import price assessments for the United Arab Emirates and Saudi Arabia.
Key talking points from the meeting of steel distributors’ association Eurometal, held in Zurich, Switzerland, on Thursday May 16
Collecting a premium for green flat-rolled steel in the US will be a long, bottom-up process for an industry already regarded as one of the world’s cleanest, market sources recently told Fastmarkets