Low Grade Iron Ore Trading - A Positive Impact on Economy, Expert Speaks: Vaman Kumar, Nordbell Commercial Limited

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Vaman Kumar, an industry expert associated with Nordbell Commercial Limited, talks about how low-grade iron ore is putting a positive impact on the steel industry. He also discusses the leading challenges in trading low-grade iron ore.

Vaman Kumar Trading Expert

Vaman Kumar Trading Expert

The modern mining scenario leaves little scope for finding optimal reserves of high-grade iron ore. Naturally, the low-grade varieties are emerging as the leading choice among the steelmakers everywhere; boosting trade. - Vaman Kumar

Low-grade iron ore is giving the steel industry something to rejoice in a time when the ban on mining the high-grade variety was giving the mining giants sleepless nights. To prove the same, an expert associated with Nordbell Commercial Limited, Vaman Kumar has compiled and shared recent data and given his expert opinion to put light on the matter.

According to Vaman Kumar, the recent rebounding of the steel market boosts demand for medium to low-grade ore related to spot markets. This in turn lends support to lower grade spot prices and encourages offers in the market actively traded.

Why low-grade iron ore is traded?

Low-grade iron ore has helped the steel industries get the much-needed raw material at a time when high-grade ore varieties seem to be a victim of over mining in most rich belts. Vaman Kumar states, “The modern mining scenario leaves little scope for finding optimal reserves of high-grade iron ore. Naturally, the low-grade varieties are emerging as the leading choice among the steelmakers everywhere; boosting trade.”

Its Uses:

The main use of this low-grade iron ore is in:

  •     Manufacture of steel
  •     Pig iron production

Useful for which industry:

According to Vaman Kumar, “Low-grade iron ore is quite useful for the steel production industry today, especially when the technologies of processing the iron ore fines continuously evolve. In India, for example, new processing plants for fines are coming up, for converting low-grade varieties to pellets for ease of steel production.” In India; the capacity for pellet manufacture is currently close to 60 M tons from next to nothing just a few years back.

Challenges in trading low-grade iron ore:

“Trading in low-grade iron ore signifies trading in coking coal too, as the situation stands for India, presently. Use of low-grade ore means industries need to use higher amounts of coal for steel processing. For India, this may signify support for prices, especially when it is purchasing coal from the established suppliers - United States, Australia, and South Africa. Even then, it will do little to help the trade deficits, especially in view of the weakening Rupees”, says Vaman Kumar.

Another interesting observation that has been made is that, traditionally, steel companies prefer high-grade varieties of iron ore because with each increase in percentage point of iron content, it signifies a 2% productivity increase. This further indicates 1% point production and consumption of coking coal. Low-grade ores contain only 48% iron with high percentages of silica and alumina that adds to the woes of the steel making industry.

Exporting and Importing Countries and Traders:

The major exporter of low-grade iron ore is Canada and the U.S.A. These countries, mostly trade with China. India has its own iron ore reserves and as such does not have much import requirements in this regard, what it requires instead are pellet plants for utilizing the low-grade varieties.

The major suppliers of low-grade iron ore are Canada and USA. Brazil the largest exporter of iron ore in the world, mostly deals with hematite, the high-grade variety. Vaman states, “Low-grade iron ore trading signifies lower import costs for countries such as India, with its indigenous reserves, but higher costs of processing and subsequent steel production. Odisha in India alone boasts of approx. 100 M tons when it comes to the low-grade variety ideal for producing almost 50 M ton steel.”

“Mining firms/ suppliers of Iron Ore in India like NMDC, Sesa Goa and mining equipment manufacturing companies like BEML, played an important role in the business of iron ore exports from India at a time when export costs were rising due to the above factors.”

With demands, increasing the world over, low-grade ore is becoming a favorite during Spot Trading. This is a different scenario than high grade trading where anything with more than 60% iron settles through long-term contract.

About Vaman Kumar

Vaman Kumar is an Economics graduate who works on an individual basis to carry out research in the fields of his interest. These include Metals, Minerals and Energy in Commodity Trading, International trade, Banking, Finance and Credit and Risk Management. His experience in these areas adds to his skill base for accomplishing the tasks that he sets for himself, to achieve.

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Vaman Kumar
since: 12/2013
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