Indian iron ore export shipments fall over 50% y-o-y in FY22
Iron ore & pellet export shipments from India have seen a considerable drop in FY'22. India's iron ore export shipments were recorded at 15.28 million tonnes (mnt) in FY'22, falling sharply by 67% y-o-y as against 46.45 mnt in FY'21.
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𝐖𝐡𝐲 𝐝𝐢𝐝 𝐢𝐫𝐨𝐧 𝐨𝐫𝐞 𝐞𝐱𝐩𝐨𝐫𝐭𝐬 𝐝𝐫𝐨𝐩?
1. Lower Chinese buying: China continued to be the largest importer of iron ore from India at 15.02 mnt in FY'22. However, exports to China witnessed a sharp fall of 65% on the year Indian iron ore export volumes remained on the lower side due to the Winter Olympics in China, a period during which the country witnessed stringent steel production curbs and preferred high-grade ore (especially lump and pellets) due to environmental concerns.
2. Odisha-based miners remained active in liquidating their low-grade ore stocks in the last fiscal which pulled up the total volumes in FY'21
3. NMDC's long-term iron ore export contracts with Japanese steel mills and South Korea's POSCO were scrapped as its key sop of reduced 10% export duty from Mar'21 was removed as against the normal 30% paid by private iron ore exporters. Thus no exports to Japan, South Korea were recorded.
All these factors resulted in drop of iron ore exports. In FY.22, Rungta mines was the largest iron ore exporter at 3.95 mnt followed by Fomento Resources and Vedanta at 1.3 mnt and 1.2 mnt respectively.
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. 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. The key factors behind drop in pellet exports were -
1. Limited Chinese buying on preference to lumps: 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).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.
2. 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.
3. 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 -
Indian iron ore exports from eastern India may remain largely range-bound. However, market sources are eyeing the final decision on the resumption of exports from Goa and Karnataka, with the hearings scheduled in the Supreme Court soon.
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