India: Iron ore imports touch 5-year high in FY'24 amid record high crude steel production

• Lower gangue content in imported ore, logistic issues encouraged imports
  
  
• Imports to remain supported amid higher crude steel production targets
  
  

India's imports of iron ore hit a five-year high of 5.31 million tonnes (mnt) in financial year 2023-24 (FY'24) compared to around 2.3 mnt in FY'23 - a huge increase of about 131% y-o-y, as per latest data available with BigMint.

Australia leading exporter

Australia was the largest exporter of iron ore to India at 3.76 mnt in FY'24. Australian miners pushed up their iron ore supplies towards end-March, 2024 before the end of their cyclone season.

Brazil occupied the second position among the top exporters with 673,155 t, followed by South Africa at 172,810 t. Import volumes from Brazil and South Africa rose y-o-y by 16% and a sharp 186%, respectively.

JSW largest importer

JSW Steel was the leading iron ore importer in FY'24 at 4.89 mnt followed by AM/NS India with 245,886 t.

Port-wise imports in FY'24

Amongst the ports, Jaigarh accounted for the major share of 4.79 mnt of imports, followed by Paradip, at 166,816 t.

Factors that pushed up iron ore imports in FY'24

• Higher crude steel production: India's crude steel production increased by around 13% to a record 143 mnt in FY'24 from 127 mnt seen in the previous fiscal (FY'23). Notably, production rose to an all-time high in the previous fiscal. Data shows that the growth in production was undoubtedly spearheaded by the IFs which grew 25% y-o-y to 50 mnt against 40 mnt seen in FY'23. The electric arc furnaces (EAFs) showed 12% growth to 31 mnt when compared to 28 mnt in FY'23.
  
  
• Quality issues of domestic ore: Domestic iron ore has a higher gangue content compared to imported ore. The level of alumina and silica in domestic ore is markedly higher than in the Australian material. Thus, the latter is obviously better suited for sintering purposes and leads to higher efficiency in blast furnaces. Moreover, with most merchant miners having hit their EC limits, mining high grade ore became a challenge, impelling mills to look at imports more intently.
  
  
• Logistical bottlenecks make imports cost-effective: Over and above the high domestic freight charges, logistical hurdles - such as shortage of rakes - posed a major challenge to mills. Logistical difficulties which intensified during the monsoon season, tilted the balance in favour of imports for some coast-based mills. For some mills looking to source iron ore for use at their plants on the west coast of India, evacuating the ore from Odisha and transporting the same via coastal shipping became more cost-intensive than the landed prices of imported ore on the west coast of India.
  
  

Outlook

Although import volumes have increased, the quantum is small in India's overall iron ore consumption, with the latter expected to reach 225-230 mnt in financial year 2023-24 (FY'24).

Indian iron ore imports are likely to remain on the higher side keeping in mind the country's increased crude steel production targets, tight availability of high-grade ore in Odisha and logistical bottlenecks.