- Over 4.8 mnt of exports in Jan – highest since Mar’21
- Jan pellet exports at 1.77 mnt – highest in three-and-a-half years
- Exports to drop in Feb’24 as Chinese stockpiling ends before CNY holidays
Morning Brief: Exports of iron ore by India, in the form of fines and lumps, spiralled to a nearly 3-year high of 4.86 million tonnes (mnt) in January 2024, the highest level witnessed since March 2021 when export volumes had touched 5.87 mnt, as per data available with BigMint. The top importer was China, accounting for a lion’s share of shipments from India, followed by Malaysia, Qatar etc.
Moreover, exports of iron ore pellets during January were recorded at 1.77 mnt, which climbed to a 3.5-year high, as per data, on pre-Chinese New Year (CNY) restocking amid fund infusion signals from the Chinese government.
India’s exports of iron ore in CY’23 were recorded at over 33 mnt, while pellet exports stood at 10.8 mnt. Above 90% of total export shipments were to China.
Why Indian exports ticked up?
China’s pre-holiday restocking: Firm restocking demand from Chinese steel mills, along with positive macroeconomic factors, ahead of the CNY holidays propelled Indian export shipments. The Chinese iron ore market received a stimulus boost after the People’s Bank of China announced a higher than expected cut in banks’ reserve requirement ratio by 50 basis points. Expectations of further stimulus to counter the negative impact from the housing market slump abound.
Sources have even indicated that many mills are mulling to continue high BF operating rates during the holidays, as they are through with routine maintenance. So, demand has been firm. At the same time, delivery of cargoes from Indian shores was recorded in January that had been booked previously. Hence, high shipments were recorded in January.
Cost-effective imports from India: Relatively high prices of imported iron ore and prolonged thin margins of Chinese steel mills have kept interest in low-grade Indian ore active. While subdued steel demand in China has kept real iron ore demand limited, macroeconomic sentiments are pushing prices higher.
Prices of benchmark Fe62% fines increased by over 25% between end-October and the beginning of January. In comparison, prices of low-grade Indian fines inched up by just around 5% since November from $86/t FOB India to $89-90/t in December-January. So, imports from India have remained attractive.
Outlook
Most Chinese mills have completed their pre-holiday buying of iron ore. Iron ore inventory at major Chinese ports rose to 126.25 mnt on 6 February compared to 107 mnt in early-Nov’23, according to SteelHome data. So, demand downturn is evident.
Putting further downward pressure on the market is muted steel demand due to inclement weather and thinning stockpiling activity ahead of the weeklong holidays, starting 10 February. If stockpiling for raw materials among steel mills has ended, market activity will be at a standstill affecting Indian exports.
