Indian Iron Ore Export Shipments Doubled in November, What is Driving It?
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Indian iron ore export shipments increase 97% in Nov 2018 against Oct
NMDC resumes iron ore exports under a long-term agreement with Japan and Korea
Demand for low grade increases in China as steel margins fall
The Indian iron ore industry is on the cusp of a new phase of growth and exports, which were heading southwards for the past few months, are beginning to swell once again. Iron ore export shipments in November 2018 stood at an impressive 0.83 MnT, almost double that of the preceding month's 0.42 MnT. The iron ore November export figure is the highest since April of the current year when India had exported 1.22 MnT of the precious raw material.
According to data maintained by SteelMint, China, expectedly, accounted for a lion's share of Indian iron ore exports with 0.60 MnT being shipped to the People's Republic, with neighboring Japan accounting for the rest. Interestingly, shipments to Japan, too, have spiked: The Land of the Rising Sun had imported a meager 0.07 MnT of Indian iron ore in October compared to 0.23 MnT in the following month.
Despite the fact that the much-contested export duty on high-grade iron ore is yet to be lifted, exports are picking up. While exports to China were an abysmal 0.12 MnT in July and September, and a not very heartening 0.22 MnT in October, it jumped almost three-fold to 0.60 MnT in November. Even as demand for Indian iron ore fines was always present in China, pellet exports have shot up of late, due mainly to restricted supply owing to the dam collapse at Brazilian mining giant Samarco's site and Chinese demand for high-grade ore to contest high pollution.
What Led To Growth In Exports?
However, the reasons behind the recent spurt in exports are not far to seek. To start with, the National Mineral Development Corporation (NMDC), India's largest state-owned miner, has resumed exports. NMDC recorded iron ore exports at 67 rakes (0.25 MnT) in November'18, up sharply by 72% on monthly basis as against 39 rakes (0.150 MnT) in October. The miner resumed exports in September'18 after a gap of five months (since March'18). Amid delay in renewal of LTA for exports and finalizing export duty, export volumes were lower earlier this year. Iron ore exports by the mining major spiked significantly in the last two months.
Secondly, preference for iron ore fines over pellets is a significant factor in propelling exports. Amid uncertainty in sintering cuts and the somewhat less stringent environmental regulations in China (compared to 2017) have resulted in an increased preference for iron ore over pellets. Chinese mills are procuring low-grade Indian ore with a view to reducing the cost of production. Additionally, iron ore prices witnessed a downtrend in November and Chinese spot iron ore prices dropped to a 4-month low of USD 64.75/MT, CFR China.
Also, favorable climatic conditions seem to be driving exports. Post-monsoon, Odisha (India's largest iron ore producing state) miners recorded highest iron ore production at 9.21 MnT, up 43% compared to September'18 production which stood at 6.43 MnT. Favorable climate for production has paved the way for exports.
Chinese Iron Ore Imports in 2018
Chinese iron ore imports this year averaged 85 to 90 MnT every month, peaking to 100.32 MnT in January and touching the nadir in April at 82.92 MnT. However, imports are picking up since July, in which month 89.96 MnT of iron ore was shipped to the country from across the world. In September, imports rose to 93.08 MnT before declining only marginally to 88.40 MnT in October.
Data maintained by SteelMint show that from January to September this year, China has imported 803.40 MnT of iron ore, mostly from Australia and Brazil but also from South Africa, Iran, and India among other nations. During the period, Australia exported 535 MnT of iron ore to China, while Brazil chipped in with 174.50 MnT. Exports by South Africa, Iran, and India were 30.16 MnT, 11.45 MnT, and 9.99 MnT respectively.
During January to September, country-wise exports to China in percentage terms would reveal China's dependence on iron ore imports. Australia and Brazil's exports were 66.59% and 21.72% respectively of total Chinese imports, while India's exports accounted for 1.24% of total Chinese imports. In November-end, total Chinese iron ore imports were 832,830 MT.
Can India Retain its Share in Seaborne Iron Ore Market?
Indian exports to China, therefore, show an uptick that is hard to miss and analysts predict that volumes could swell in the coming months. Want to keep a close track of Indian iron ore exports and the currents and counter-currents that will shape the domestic and South Asian market? Make sure you attend the 3rd Iron Ore and Pellet Summit to be held on 18 & 19 February 2019, in Gurgaon, Delhi, India.
