India’s iron ore exports witnessed a sharp fall of 76% y-o-y to 2.8 million tonnes (mn t) in Q2FY’22 as against 11.7 mn t in the corresponding period last year, according to the vessel line-up data maintained with SteelMint.
Factors behind decline in Indian iron ore exports
- Subdued Chinese demand on steel production cuts: Limited Chinese buying of low-grade iron ore kept Indian exports on the lower side, indicating that steel producers have significantly reduced their capacity under the pressure of production cuts.
Demand in the Chinese market gathered pace in the month of September and is further expected to grow. However, even if the cuts are widened further, steel prices are unlikely to increase significantly, partly because falling iron ore prices have eased production costs.
- Widening discounts on low-grade ore: A major Australian iron ore miner has increased the discount for sub-grade iron ore or super special fines (SSF) on the back of falling overseas demand and steel output cuts in China. According to sources, the miner has increased the discount on SSF for Oct’21 to 40% against 30% in September, as per latest reports.
- Falling realisations in exports: As per SteelMint’s assessment, Fe57% Indian iron ore fines prices fell from $115/t CNF China in early July to $60/t CFR China towards end-Sept’21. The falling export realisation kept Indian exporters inactive in the market.
Indian iron ore exports to China fall 76% y-o-y
China continued to remain the largest importer of Indian iron ore in Q2FY’22 with 2.73 mn t, down 76% as against 11.16 mn t seen in Q2FY’21.
Exports to Japan and Korea remained nil as NMDC’s long-term export contracts expired at the end of last fiscal. NMDC’s long-term iron ore export contracts with Japanese steel mills (JSMs) and South Korea’s POSCO have been scrapped as its key sop of a reduced 10% export duty has been removed as against the normal 30% paid by private iron ore exporters.
Shipper-wise exporters in Q2FY’22
Rungta Mines was the largest iron ore exporter at 1 mn t in Q2 FY’22, down 62% as against 2.6 mn t seen in Q2 FY’21.
Shipper-wise Indian iron ore exports in Q2FY’22 versus Q2FY’21
Qty in mn t, provisional data,
Source: SteelMint Research, Customs
Outlook
According to SteelMint’s analysis, India’s iron ore export volumes (including pellets) are expected to witness a 40% y-o-y drop in FY’22 and remain at 35-40 mn t as against 60 mn t seen in FY’21.
Leave a Reply