A World Steel Association report on preliminary crude steel production volumes for March indicates that India surpassed Japan to reach No. 2 in the world after China, with the South Asian country's tally advancing 8.2% on the year to 9 million tons.
The Indian economy has been growing at around 7% a year. Just like in China, automobile-related demand and infrastructure development have been driving India's steel production increase. The country has domestic iron ore mines, but Australia has become an important source of steel raw material because its output at home is not enough to satisfy demand.
Australian miners' ramping up production and optimistic outlooks stem from falling production costs.
At Fortescue Metals, the current production cost per ton of iron ore has fallen 12% from a year earlier to roughly $13. The figure stands at $13.7 for Rio Tinto and about $15 for BHP Billiton, all sharply lower than several years ago.
According to Rio Tinto CEO Jean-Sebastien Jacques, efficiency is a key focus when the company works to bolster production. It aims to raise output without making large capital investments by eliminating waste in the production process.
Also contributing to the Aussie Iron Ore miners' positive outlook is experts' view that iron ore prices are unlikely to fall further. Having been oversold, iron ore prices will readjust and remain in the range of $70 to $80 per ton this year, an analyst predicted.
Many Australian fund managers are viewing the dramatic drop in the price in mining shares as a prime opportunity to buy into the sector.
Being that NSL is in India and India's output at home is not enough to satisfy demand then NSL should have no problems in the sales dept.
NSL Price at posting:
3.0¢ Sentiment: Buy Disclosure: Held
