Brokerage Prabhudas Lilladher said domestic iron ore supplies improved strongly on the back of re-opening of mines in Odisha and enhanced mining capacity of existing mines but this is not expected benefit the domestic producers.

Prabhudas Lilladher said the sharp fall in iron ore prices globally has eroded the advantage Indian steel players enjoyed so far because of access to cheap iron ore. It added the increase in supply for domestic iron ore will benefit Sajjan Jindal-led JSW SteelBSE 5.15 % more than Steel Authority of India Ltd and Tata Steel as they already have captive iron ore mines.

Prabhudas Lilladher is maintaining an 'underweight' outlook on the steel sector.

Despatches of merchant miners in Odisha grew 24 per cent to 4.1 million tonnes (mt) in June 2015, the highest monthly despatch in June since 2011, according to the brokerage. Also, Karnataka's iron ore capacity rose by about 20 per cent to 24 mt in June 2015, it added. �