Dolomite prices in India rose with an increase of 2.2% in May. It has been noted that this increase occurred with limited supply and a strong pickup in demand from the cement and infrastructure industries.
With regard to India's mineral production, efforts have concentrated on coal and iron ore. Concerning coal, Coal India announced the revival of 32 closed colliery mine sites in May to provide energy amidst dismal transition to renewables and extending logistical mine footprint over geographies. Moreover, Coal India has established its all-time high coal stocks in May, but there are backlogs in rail and transport logistics for minerals, including dolomite.
At the same time, the government gave an environmental clearance to Lloyds Metals & Energy Ltd (LMEL) to increase iron ore production in Maharashtra, with production capacity increasing from 10?Mt per annum (Mtpa) to 26?Mtpa. The focus of industry on other minerals has removed labor and logistical assistance away from dolomite mining, constraining supply and affording leverage to producers on price.
On the demand side, recent research provided by Institutional Equities noted a nationwide increase in prices and volume of cement in May, and in particular, the Southern states highlighted robust increased construction activity as a result of resumed capital expenditure and increased activity with respect to the construction of both urban and rural infrastructure projects.
As dolomite is essential to cement manufacture, as a fluxing agent and to improve strength, this rebound in demand has continued. Industry participants highlighted significant dolomite off-take by cement plants prior to the monsoon, ahead of the current production levels, and raise the price by 2.2%.
Analysts have indicated dolomite pricing may remain stable or even trend higher in the near term if the investment in infrastructure continues at this capacity. Although coal logistics from Coal India may ultimately relieve capacity, the current coal and iron ore prioritization limits short-term dolomite supply potential.
“Dolomite producers are facing dual challenges—strong demand from cement producers, with supply constraints related to policies and logistics," said a market participant.
Market observers will be keenly watching the onset of the monsoon season; heavy rains could further disrupt material movement and mining productivity. Keep in mind that any softening of steel or iron ore production could translate to clearing an excess amount of backlogged infrastructure and further normalizing dolomite flows.
In summary, the 2.2% dolomite price increase in May signifies an evolving reality in India's mineral markets, caused by the interaction of robust demand from the cement and infrastructure sectors, and supply constraints resulting from transport inefficiencies and cross-mineral competition.
