- Brazil, South Africa see production drops
- India’s overseas sales dealt body blow by export duty
- Global crude steel output decline weighs on imports
Morning Brief: Global iron ore exports are seen dropping by 5.50% in calendar 2022 (CY22) to around 1,447 million tonnes (mnt) against 1,532 mnt recorded in 2021, reveals data maintained with SteelMint.
Factors that weighed on iron ore exports this year
Supply-side issues:-
The top three exporters through the year have been Australia, Brazil and South Africa. While exports from Australia have been stable, others have not been so lucky, faced with their own challenges and widespread crude steel production declines seen across the globe. Australia is set to end the year with a leading 856 mnt, stable y-o-y.
Brazil sees drop in output: Brazil, the second-largest exporter, will possibly see a 4% drop in volumes this year to 344 mnt against 359 mnt last year. A key reason for this is the lowering of production guidance from Brazil’s leading miner Vale. It cut its output guidance to 310-320 mnt for CY22 against the previous 320-335 mnt.
The reasons were sale of its 3.5 mntpa mid-western systems operations in early April this year. That apart, there were some logistic issues and slower licensing processes.
South Africa plagued by logistic issues: The third-largest iron ore exporter, South Africa, will also see a drop, of around 14%, in exports this year. The main reason was a strike spearheaded by national logistics major Transnet’s unions which impeded movement of material.
Transnet, which operates South Africa’s freight rail network and all its ports, had declared a force majeure in October. The strike has been called to protest against wage increase proposals. That apart, Transnet had been beset by various other challenges that included heavy rains and fire that led to stalling of traffic intermittently. As a result, production from South Africa’s key miners showed a drop too.
India’s exports seen plunging: India’s iron ore and pellets exports will probably be plunging 58% in 2022 to a mere 15.70 mnt against over-37 mnt in 2021. Iron ore and pellet exports were badly hit post-the imposition of the restructured export duty on 22 May. The export duty on iron ore lumps with more than Fe58% content was raised from 30% to 50% ad valorem while a duty of 50% was imposed on iron ore below Fe58%, and 45% on iron ore pellets.
Demand-side issues:-
China’s import appetite wanes: China is globally the largest iron ore importer. However, its import volumes dropped almost 3% y-o-y to 1,097 mnt (1,126 mnt in 2021) due to its own challenges. First was the production cuts effected to curb crude steel production.
Secondly, the collapse of the property sector, the largest steel consumer along with infrastructure construction, leading to loss of steel demand. Thirdly, Covid surges kept the country in lockdowns which also impacted steel demand. Lastly, China’s domestic iron ore production is slated to be higher this year against 2021’s 959 mnt.
Crude steel output decline: Other key importers also saw a drop in their volumes due to fall in crude steel output. Worldsteel data shows that all the top 10 steel producing countries, except for India, have seen a drop in output in January-November, 2022 y-o-y. China’s production dipped 1.4%, and Japan’s by 6.9%. Russia showed a drop of 7%, South Korea, 6.1% and Turkiye’ decline was by over 12%.
That apart, production of the 64 countries reporting to worldsteel saw a 2.6% y-o-y dip in production in November 2022 and over January-November, by 3.7%. A drop in crude steel production, in a cascading effect, leads to lesser iron consumption.
Karnataka resumes iron ore exports after a decade – What’s next?. To know more, book your seat at SteelMint’s Road Show-cum-Conference on Karnataka’s Mining Sector to be held on 19-21 January, 2023.
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