How will India's iron ore exports pan out in FY'25?

• Volumes to remain range-bound this fiscal
  
  
• Higher iron ore production to support exports
  
  
• Question mark remains over Chinese demand
  
  

Morning Brief: Indian iron ore exports (excluding pellets) are projected to drop slightly, by less than 5% y-o-y, to around 35 million tonnes in financial year 2024-25 (FY'25), as per BigMint's estimates, after hitting a three-year high of around 37 mnt in FY'24.

It may be mentioned that last fiscal's volumes had surged 145% y-o-y compared to a far lower 15 mnt in FY'23.

Factors that will impact India's iron ore exports in FY'25

• Higher iron ore production: A key factor that will not allow India's iron ore exports to drop from the current levels is that production may increase around 10% y-o-y in FY'25. As per BigMint's estimates, iron ore production is likely to touch 305-310 mnt against 280 mnt recorded in FY'24. This growth in output is essential for supporting India's growth in steel production, which is estimated to touch around 146 mnt in this fiscal.
  
  

• Duty benefits to keep low-grade exports high: Exports of material below below Fe 58% accounted for over 99% share in India's iron ore exports in FY'24, at 36.4 mnt. This scenario was facilitated by the lifting of the export duty of 50% on iron ore and 45% on pellets, not to forget the 15% levy on finished steel exports in November 2022. It may be recalled, these duties had been slapped in May 2022, a move that had almost stalled overseas sales. Their removal six months later led to a spurt in iron ore exports in a knee-jerk reaction. The lion's share of the low-grade material in exports is likely to continue into FY'25.
  
  
• Additional production to go onstream: Miners in Goa and Chandrapur (Maharashtra) may add to the output volumes which will also help to keep exports supported in FY'25. For instance, Vedanta has already started production in Goa and some miners in Goa may also start in the second half of the current fiscal. Vedanta led the exports charts in FY'24 with 6.30 mnt, followed by Rungta (6.01 mnt) and Praful Enterprises (3.32 mnt). Meanwhile, JSW Steel also added to the kitty last fiscal, exporting 3.27 mnt of low-grade material from its Odisha mines and bagging the slot of the fourth-largest exporter. This trend is expected to continue this fiscal.
  
  

• Will China's demand for low grade ore sustain? China is the largest importer of Indian iron ore and its volumes comprised 97% of the total 37 mnt in FY'24, at well over 35 mnt. In fact, Chinese demand for Indian low-grade iron ore has been somewhat erratic over the last five years but rose to their highest of 35 mnt last fiscal. However, it remains to be seen to what extent Chinese appetite will sustain this fiscal. Crude steel production is expected to increase slightly, supported by a slight demand recovery seen on the back of the stimulus measures. On the other hand, the steel industry is yet to shake off the realty bites. Crude steel production over January-April, 2024, fell 3% y-o-y.
  
  

BigMint is back with its flagship conference. The 7th Indian Iron Ore & Pellet Summit, to be held over 22nd and 23rd August, 2024. Sessions will include forecasting on India's steel raw material dynamics. Experts will delve deep into pricing trends and the iron ore supply-demand projections for 2030. The spotlight will be thrown on how India is readying itself to fulfill the rising demand for iron ore as well as the regulatory framework and policy implications. Come, join us at The Leela Ambience, Gurugram, India, for a healthy exchange of ideas and networking opportunities.