India’s iron ore export shipments are expected to fall in the near-term due to restrictions on the number of trips trucks from specified mines can undertake to deliver iron ore to Odisha’s Paradip and Gopalpur ports.
Market participants expect a fall of around 20-30% in export shipments over the next few months if the restrictions are not lifted.
Fall in export deliveries could lead mines to divert cargoes into the domestic market, pressuring prices. Export prices are unlikely to be much affected by fewer cargoes arriving from India, as Chinese mills are largely focused on stocking up on high and medium-grade ores. Low-grade ore supplies are usually available in sufficient quantities in China from Australia and non-mainstream sources.
Expectation of stricter pollution control in China this month and rainy season in southern China has also slowed iron ore procurement. Tradable price for Indian low grade iron ore fines (Fe 57%) was at $69-70/t, CFR China on Monday.
The cap on truck movement at the Odisha ports was taken to avoid traffic congestion on national highways and lower risk of Covid-19. Quantity of iron ore transported from mine pitheads to these two ports has fallen since the order was enforced on 25 June.
Total trips from a total of 19 mines to Paradip port has been capped at 935 per day while trips to Gopalpur port were capped at 332 per day.
Paradip port accounts for the largest share of Indian iron ore exports, contributing about 40-55% on a monthly basis. India’s total iron exports (excluding pellet) in June’20 was at 3.93 mn t, with Paradip port accounting for 1.66 mn t and Gopalpur at 0.70 mn t.
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