India: Iron ore export shipments drop over 75% y-o-y in Jul’22

India’s iron ore export shipments were recorded at 0.45 million tonnes (mnt) in July 2022, a sharp drop of 78% y-o-y as against 2.05 mnt seen in July 2021, according to the vessel line-up data maintained with SteelMint.

• China largest importer: China continued to be the largest importer of iron ore from India at 0.37 mnt in July 2022, as compared to 0.14 mnt in June, 2022.
• Shipper-wise exporters: Bagadiya Brothers was the largest iron ore exporter in July at 0.149 mnt followed by Praful Enterprise and Starlight Ispat at 0.148 mnt and 0.08 mnt, respectively.
• Port-wise exports in July: Paradip Port was the busiest for iron ore exports in the month under review with 0.3 mnt as against 0.14 mnt in June. Gopalpur Port stood in second place with 0.08 mnt followed by Gopalpur Port with 0.07 mnt.

Reasons behind price drop

• Export duty impact: While China’s steel production curbs in the second half of 2021 had cast a shadow over India’s export prospects, the government’s overnight imposition of stringent export duties on steel, iron ore and pellets towards the end of May 2022 adversely impacted export volumes, SteelMint notes. In the third week of May, the government imposed a 50% export duty on iron ore of all grades from the previous 30% levied only on ore of grade Fe58% and above. At the same time, it fixed a steep 45% duty on exports of pellets from the country. These trade policy measures directly hit export volumes. Steep duties are meant to discourage exports and ensure enough raw material availability for the domestic producers of iron and steel.
• Global iron ore price drop: The spot price of benchmark iron ore (Fe 62%) fines index decreased from $131/t CFR China in June 2022 to over $107/t CFR China in July 2022 as weak demand continued to weigh on prices. Seaborne iron ore prices continued to drop in the month amid poor seaborne liquidity and bearish market sentiments.

Outlook

India’s iron ore export shipments are likely to remain on the lower side in August as the market has turned silent after the government imposed a steep 50% export duty on iron ore of all grades from 30% previously only on grades above Fe 58%.