India: Pellets export shipments fall 19% in FY’22 on higher domestic realisations

India’s pellets export shipments were recorded at 11.17 million tonnes (mnt) in FY’22, a significant fall of 19% y-o-y as against 13.85 mnt in FY’21, according to vessel line-up data maintained with SteelMint.

Exports to China fall 33%

China continued to be the largest importer of pellets from India at 7.44 mnt in FY’22. However, exports to China witnessed a decrease of 33% y-o-y compared to 11.04 mnt in the corresponding period last year (CPLY).

Pellets shipments to China declined y-o-y on the considerably higher base of 2020 as well as the bleak steel production scenario in China that unfolded since the beginning of H2CY’21.

Indonesia occupied the second position among the top importers at 0.83 mnt followed by South Korea at 0.49 mnt. Export volumes to Indonesia and South Korea witnessed a sharp increase of 84% and 158%, respectively.

Shipper-wise exporters

Rashmi Metaliks was the largest pellet exporter in FY’22 at 2.18 mnt followed by KIOCL and BRPL at 2.04 mnt and 2.02 mnt, respectively.

Why did pellets export fall in FY’22?

• Limited Chinese buying on preference to lumps: Indian pellet export volumes remained on the lower side in FY’22 due to consumption controls, reduction of greenhouse gas emissions in the steel industry, and steel production curbs in China which boosted preference for iron ore lumps. Since lumps have better cost performance than pellets, the proportion of lumps usage increased. Also, demand continued to get support from winter sintering curbs and higher blast furnace utilisation rates in China, market sources said.
• Higher iron ore production in China: China’s domestic ROM production increased to 958.99 mnt in CY’21 against 867.45 mnt in CY’20.
• Higher domestic realisations: SteelMint’s pellet export index (Fe 64%, 3% Al, FOB east coast) stood at $168/t in FY’22. On the other hand, SteelMint’s domestic pellet index was recorded at INR 13,250/t ($175/t), DAP Raipur in the period under review, showing higher realisations in domestic bookings. With prices rising significantly, Indian pellet makers turned aggressive in domestic sales, amidst lower exports realisation.

Outlook: Rapid depletion of high-grade iron ore reserves across the world has resulted in a growing preference for pellets in steel production, both in EAF and IF routes as well as primary blast furnace steelmaking. Indian players have pellet capacity ramp-ups in the pipeline.

India’s pellet capacity rose from around 95 mnt in CY’20 to around 110 mnt in CY’21. Production volumes also witnessed an increase from 65 mnt in CY’20 to 75 mnt in CY’21.