India’s iron ore exports fall as China demand weakens

11 june 2018

India’s iron ore exports fell by 21pc in the 2017-18 financial year that ended 31 March, hit by weak demand for low-grade fines in China.

Exports fell to 24.38mn t in 2017-18 from 30.72mn t in 2016-17, according to government data.

Exports of iron ore fines, concentrate and lump fell to 15.04mn t from 21.88mn t over the same period. India mostly exports low-grade fines to China. But Chinese mills are making robust profits and so have focused buying on high-grade, mainstream ores, with deepening discounts even on high-quality, medium-grade fines such as Fortescue’s SSF fines and blended fines.

India’s Supreme Court suspended iron ore mining in the coastal state of Goa from 15 March, which will sharply reduce fines exports in 2018-19. Goa set a court-mandated production limit of 20mn t/yr. It could take several months for mining to resume in Goa, as new auctions of mining leases and fresh environmental clearances may be needed.

India exports around 2mn-4mn t/yr of high-grade fines through government-to-government contracts with Japan and South Korea. Exports of high-grade fines are mostly unviable because of a 30pc export duty.

But India’s exports of pellets increased to 9.34mn t in 2017-18 from 8.84mn t in 2016-17 because of strong demand from China, where environmental restrictions have lifted demand for direct-charge material such as pellet and lump. Pellet supplies have remained tight in China since operations at the Samarco iron ore mine in Brazil were suspended in November 2016 following an accident.

Continued environmental checks and restrictions in China, especially on sintering and pelletizing equipment, are likely to keep demand for Indian pellet robust in the near-term. Demand for low-alumina pellet is stronger than for supplies with high alumina content, as alumina penalties have risen sharply over the past few months.

Source: ARGUS