Various factors such as depreciation of the rupee against the dollar, higher prices in the spot market and improved supply in the domestic market contributed to the decline in imports. The supply of iron ore improved, as the prices of lumps saw an average fall of Rs 700 a tonne, while prices of fines declined Rs 400 a tonne, analysts said.
"Sponge iron makers switched to domestic lumps. There was no export of lumps from India in the last three years, which resulted in improved supply domestically. NMDC also reduced prices this year, which resulted in buyers preferring domestic supply over imports. The rupee's depreciation also contributed," said Prakash Duvvuri, head of research at OreTeam, a Delhi-based iron ore research firm.
He added the primary factors behind the fall in imports were the high currency conversion rates and low demand for steel and scrap in the domestic market. JSW Steel, Bhushan Steel and Welspun had cut imports this year, he said.
In 2012-13, JSW alone had imported about two mt. Domestic production didn't see a substantial rise this year. At about 18 mt, production in Karnataka rose marginally.
During most of 2013-14, iron ore prices stood at $130-133 a tonne in the spot market; now, these stand at $110 a tonne. "The decline in prices in the global spot market will aid coast-based steel mills. It is likely next financial year, these will import, as spot prices are set to fall further, possibly to $85-90 a tonne," Duvvuri said.
JSW Steel has a plant at Dolvi, on the coastline near Mumbai. In 2012-13, the company had imported ore for this plant.
The lower spot market prices also presented a good opportunity for global producers such as Vale or BHP to enter into long-term supply contracts with Indian steel mills, he added.