io price rising - india exports falling

The latest IO spot price quoted on Macrobusiness.com.au is $121.10 with the 12 month swap figure being $110.83 - both up a tad from the previous day.

With GRR achieving a premium (above the spot price) for their pellets it will be interesting to see the average price achieved for the current quarter, in the next three month report. That report should issue around mid Jan. 2013. It would be great to see a result that shows costs contained at $105 per unit as forecast by GRR and an average price that surprises on the upside which is a definite possibility providing there isn't a major downwards shift in the IO price.

From the same website comes the following comment indicating that India is likely to curtail IO exports at least in the short/medium term -


........... "India’s iron-ore shipments are expected to plunge to about 25 million metric tons this fiscal–from 60 million tons in the year ended March 31–as the mineral-rich eastern state of Orissa has suspended all exports, a senior trade body executive said Tuesday.

…Orissa’s move follows a mining ban in the iron-ore rich state of Goa, while another major producer, Karnataka, has only just begin easing a mining ban. The three states together account for the bulk of iron-ore output in India, the world’s No. 3 exporter.

The eastern state is also demanding a total payment of 670 billion rupees ($12.3 billion) in penalties from 103 companies for excessive mining.

“Yes, we have sent notices to mining companies. Representatives of the companies are free to appeal to the state government if they want to,” Orissa’s Director of Mines Deepak Kumar Mohanty said, but didn’t name the companies.

…The country’s iron-ore production is expected to fall to 100 million tons this year from 160 million tons last year, Mr. Poddar said.

…The Orissa government has asked Tata Steel to pay a fine of more than $1 billion for excessive mining, a person with direct knowledge of the matter said.

…Analysts said the mining industry will likely contest the demand for penalties in court.

“Our checks reveal that though most of the measures are not legally tenable, they will trigger a faceoff between miners and the state government,” Prasad Baji of Mumbai-based brokerage Edelweiss Research said in a note. .......... "

The indicatiors for GRR are good but the SP is woeful and unlikely to show much improvement until direction (and/or funding) for Southdown is clarified. This should be a major concern for management/the board and a priority. Unfortunately it would appear that RGL and Shagang have too much influence and may be quite happy to just let things drift along with no firm action.


IMHO/DYOR