India may become a key future customer for iron ore producers in Australia as its steel industry grows and the nation seeks to raise living standards, according to Fortescue Metals Group Ltd.
“India will be an incredibly important market for us,” Fortescue Chief Executive Officer Nev Power said today in an interview in Kalgoorlie, Western Australia. “We see the steel industry in India developing along the coastal seaboards, in the same way that we are seeing that transition in China.”
India may become a net importer of iron ore this year with steelmakers including JSW Steel Ltd., the nation’s third-largest producer, buying as much as 15 million tons from abroad, the Federation of Indian Mineral Industries said on July 30. Local supplies of the steelmaking ingredient in India, once the world’s third-largest exporter, have been restricted amid curbs on mining in some areas.
Efforts to improve living standards in India and also in nations across South Asia and North Africa will need “urbanization and industrialization and therefore steel,” Power said. “There are 3.5 billion people living in the world’s developing economies right there in this region, two or three weeks sailing time from the Pilbara.”
Atlas Iron Ltd., a producer with mines in the Pilbara region of Western Australia, made its first shipment to India in May and has staff visiting the country to develop ties to potential customers, Managing Director Ken Brinsden said yesterday.
“We all got caught by surprise back in 2003 and 2004 by China,” Brinsden said in an interview in Kalgoorlie. “One of the lessons I hope we have learned is that we should keep an eye on places like India, where you have got the potential for massive growth in urbanization.”
An increase in iron ore imports to India this year may prove to be temporary, according to Ivan Szpakowski, a Shanghai-based commodity analyst at Citigroup Inc.
“India is not transitioning to becoming a structural importer of iron ore,” Szpakowski said today by phone.
Iron ore prices, which rose in July for the second consecutive month, will rise above $100 a ton by the end of the year as Chinese domestic producers reduce or halt output, Fortescue’s Power said. Ore with 62 percent content delivered to Tianjin port in China, rose 0.2 percent to $95.40 a dry ton yesterday, according to The Steel Index Ltd.