China is perhaps the single most important country today when it comes to the steel industry. It is one of the largest producers of iron ore in the world. But its steel making capacity has reached such huge proportions that it still needs to import iron ore in very large quantities. Normally, iron ore is supplied under long term contracts. But the quantity of Chinese imports is so large that there simply isn't that much supply available under long term contracts. As a result, a spot market for iron ore has evolved.
One of the key suppliers in this spot market is India. Now, it does seem ironical that India should be exporting iron ore at a time when it is really trying to ramp up its steel production. Unfortunately, it is true because India's steelmaking capacity has not grown as fast as it should have. But the situation seems to be changing of late.
As per a leading business daily, India's share of iron ore imports by China fell to 17% 2009, down from 20% in 2008. There are a slew of brownfield and green field steel projects lined up in India. As a result, the demand for iron ore from within India is growing. Plus there is also the fact that the Indian government has imposed export taxes on iron ore. In fact, as shown in the chart below, the Australian Bureau of Agricultural and Resource Economics (ABARE) predicts that India's export of iron ore will keep declining while China's imports will keep increasing.
![]() |
Source: ABARE |
In our opinion, greater consumption of Indian ore within India is a welcome trend. Converting iron into steel adds more value, which can then be exported at better prices. Of course, we are more likely to consume the steel domestically rather than export it. After all, steel is used in industries like infrastructure, housing, automobiles and consumer durables. All of these are likely to witness strong growth in the days ahead.
For information on how to pick stocks that have the potential to deliver big returns, download our special report now!
Read the latest Market Commentary
What else is happening in the markets today? Dig in...
Indian share markets end deep in the red with the Sensex down by 1,939 points and the Nifty ending down by 568 points.
ONGC share price is trading down by 7% and its current market price is Rs 118. The BSE OIL & GAS is down by 4.0%. The top gainers in the BSE OIL & GAS Index is CASTROL INDIA (up 1.3%). The top losers are ONGC (down 7.1%) and GAIL (down 6.3%).
ULTRATECH CEMENT share price is trading down by 5% and its current market price is Rs 6,487. The BSE 500 is down by 3.4%. The top gainers in the BSE 500 Index are SOUTH IND.BANK (up 10.4%) and JAGRAN PRAKASHAN (up 10.0%). The top losers are ULTRATECH CEMENT (down 5.0%) and BAJAJ FINSERV (down 6.3%).
JAGRAN PRAKASHAN share price is trading up by 10% and its current market price is Rs 60. The BSE 500 is down by 3.2%. The top gainers in the BSE 500 Index are JAGRAN PRAKASHAN (up 10.1%) and RCF (up 11.0%). The top losers are MAHINDRA CIE AUTO. and AJANTA PHARMA (down 0.1%).
UPL share price is trading down by 5% and its current market price is Rs 589. The BSE 500 is down by 3.2%. The top gainers in the BSE 500 Index are RCF (up 11.0%) and SOUTH IND.BANK (up 10.4%). The top losers are UPL (down 5.4%) and BAJAJ FINSERV (down 6.2%).
ICICI LOMBARD GENERAL INSURANCE share price is trading down by 5% and its current market price is Rs 1,479. The BSE 500 is down by 3.2%. The top gainers in the BSE 500 Index are RCF (up 11.0%) and SOUTH IND.BANK (up 10.4%). The top losers are ICICI LOMBARD GENERAL INSURANCE (down 5.2%) and BAJAJ FINSERV (down 6.2%).
View More Indian Share Market NewsLast time the smallcap index crossed 19k a big correction followed. Here's what makes it different this time.
In this video, I'll cover your queries on intraday trading and also share my view on how to decide stop losses and target prices.
A look at what India's top equity mutual funds bought and sold in January 2021.
Do you enjoy reading Tesla and Bitcoin stories? Here's a not so famous small-cap stock to profit from the rise of EVs.
More
Equitymaster requests your view! Post a comment on "India wants this commodity for itself". Click here!
Comments are moderated by Equitymaster, in accordance with the Terms of Use, and may not appear
on this article until they have been reviewed and deemed appropriate for posting.
In the meantime, you may want to share this article with your friends!