India: Iron ore export shipments drop 34% y-o-y in CY'21

India's iron ore export shipments witnessed a fall of 34%, y-o-y, in CY'21 to 26.82 million tonnes (mn t) against 40.7 mn t in CY'20, according to vessel line-up data maintained with SteelMint.

Iron ore exports to China decline 33% y-o-y: China continued to remain the largest importer of Indian iron ore * in CY'21 at 25.58 mn t. However, the volumes were down by 33% y-o-y as against 38.11 mn t in CY'20. Japan stood as the second-largest importer at 0.74 mn t in CY'21 followed by South Korea at 0.22 mn t.

Shipper-wise exporters in CY'21: Rungta Mines was the largest * iron ore exporter in CY'21 at 7.07 mn t, down against 8.86 mn t in the previous year. SM Niryat stood as the second-largest exporter at 1.58 mn t followed by Fomento Resources at 1.57 mn t in CY'21.

Factors behind the drop in export volumes -

• Limited Chinese buying: The decline in export shipments was largely due to lower Chinese buying on steel production cuts. In CY'21, the Ministry of Industry and Information Technology mandated that China's crude steel output cannot exceed the CY'20 level, indicating this as necessary to reduce emissions and balance domestic steel supply-demand. In the first 11 months, China's crude steel output already fell by 2.4% y-o-y to 945 mn t. Sinter cuts kept demand for pellets and lumps strong but demand for low -grade fines weakened further.
  
  
• Lower exports to Japan, South Korea: NMDC's long-term iron ore export contracts with Japanese steel mills (JSMs) and South Korea's POSCO were scrapped as its key sop of a reduced 10% export duty from Mar'21 was removed as against the normal 30% paid by private iron ore exporters.
  
  
• Falling export prices: As per SteelMint assessment, India Fe 57% iron ore fines index fell from $110/tonne (t) CNF China at the beginning of Jan'21 to $53/t CFR China towards end-Dec'21. Further, prices on ex-plant realisations were quite low which held back Indian players from exporting.
  
  
  
• Changing dynamics in Odisha iron ore market: In CY'20, Odisha-based miners remained active in liquidating their low-grade ore stocks. Iron ore exports from Odisha increased as nineteen iron ore mining leases that were put up for auction were busy liquidating their inventories. However, this was not the case this year as majority of leases went for the captive purpose.
  
  

Outlook

India's iron ore export index corrected marginally in end-Dec'21 as trades remained muted. The iron ore export market continues to remain inactive in December. However, a recovery in global iron ore prices may lend some suport to low grade fines prices.

Recently, the Goa Cabinet passed a policy approving exports of iron ore from dumps to the tune of 10-20 mn t lying outside, said Chief Minister, Pramod Sawant. This may push export volumes from India in the coming months.

*corrected to iron ore