Indian Share in Chinese Pellet Imports Increase to 46% - Data

India's Rising Share in Chinese Pellet Imports

China - world's largest iron ore importer has raised iron ore & pellet imports further in this year. China imported 14.53 MnT pellets in CY16. Out of the total quantity of pellets imported by China in CY16, India occupied largest share with 3.69 MnT followed by Ukraine (3.23 MnT), Australia (2.01 MnT), Brazil, Russia and others.

In CY17 (till Aug'17) China imported 11.34 MnT pellets, up by 17% Y-o-Y. Share of pellet exports from India to China has increased significantly to 46% at 5.25 MnT followed by Ukraine (1.64 MnT), Brazil (1.28 MnT), Australia, US, Russia and others.

Indian iron ore pellets seem to be higher in demand in China from 2016 onwards. And increased demand from China for high grade material amid environmental control policies and reduction in sinter usage has boosted demand for pellets in China. Restricted pellet supply from Brazil is another reason which has strengthened Indian pellet exports.

Since last few months, it can be noticed that pellet export deals concluded by Indian pellet manufacturers are driving spot pellet premium. For instance in mid of Oct'17, BF grade pellet premium moved up sharply by USD 10 to USD 54.7/MT, CFR China after Indian pellet manufacturer Jindal Steel & Power concluded a deal at USD 118.5/MT, CFR China.

Factors that have boosted Indian pellet exports to China-:

Strict environmental policy to curb pollution: The demand for higher iron ore (pellets and lump) is on the rise in China as a result of pollution control measures. As a result high grade Pellet demand rise over sintering cuts and low grade iron ore. The use of sinter and low grade material has already been reduced by millers over higher grade iron ore or pellet as feeder. Agglomerated iron ore product forming a uniform high quality feedstock for the blast furnace.

China's iron ore demand to fall further in next 5 months- With a purpose to reduce air pollution, Chinese govt has announced restrictions on steel production during Oct'17- Mar'18. This will affect steel makers in Hebei, Shanxi, Tianjin, Shandong and Henan areas, at above mentioned period they will cut back on iron ore demand by 70.64 MnT. Among those areas Hebei will be affected most, Hebei will cut back on iron ore consumption by 33.64 MnT (i.e 1.44, 4.55, 8.21,8.11, 7.16, 4.14 MnT from Oct'17 to March'18).

Restricted supply of Pellets from Brazil-: Pellet exports from Brazil have dropped considerably after Samarco dam disaster in Nov'15. Samarco has an annual pellet production capacity of 30.5 MnT and produced 12.31 MnT pellets in CY15. As per the latest reports, there are little chances of restarting operations by the end of this year.