Indian Iron Ore Export continues to decline

Indian Iron ore export has witnessed constant downtrend owing to fall in global Iron ore prices and appreciating INR against USD.

Indian Iron ore exports have reduced drastically (M-o-M) i.e. from 0.9 MnT in Apr’14 to 0.3 MnT in Jun’14.  Exports fell by 45% in Q1 FY15 to 1.94 MnT against 3.9 MnT in Q1 FY14.

Rationale behind decline in Export

1. Poor Steel Demand in China: Chinese steel companies are struggling because of slow down in construction activities and lack of enough government schemes to strengthen building projects
2. Constant fall in Spot Iron Ore Prices: Spot Iron ore fines prices are trading at about 3 years low. Currently, it is at about USD 93-94/MT CNF China for Fe 62%
3. Continuous rise in Stockpile at Chinese Major Ports: Iron ore stockpile has reached about 12.5 MnT in July, 2014 and raised by 830,000 MT (W-o-W)
4. Appreciation in INR against USD: Since last six months Indian Rupee has appreciated by USD 2.34 from INR 62.25 in February, 2014 to INR 59.91  in July, 2014 (till 23 Jul, 2014)

The consequence of decline in exports is constant reduction in Chinese spot Iron ore fines prices in last few months. Looking at the current scenario, the exports are likely to be less than 0.2 MnT in July, 2014.