India's iron ore exports recover in May'24 after dropping for three consecutive months

• Improved China demand impacts iron ore exports
  
  
• JSW Steel emerges as largest exporter, Rungta 2nd
  
  

India's iron ore fines and lumps exports were recorded at 3.28 million tonnes (mnt) in May 2024 against 2.24 mnt seen in April, showing a m-o-m surge of around 46%. Meanwhile, export volumes rose by 14% y-o-y against 2.88 mnt recorded in the same period last year. Notably, export volumes have recovered after dropping for three consecutive months since February 2024.

Meanwhile, pellet exports increased significantly m-o-m to 0.89 mnt in May 2024, against 0.20 mnt in April which was the lowest since September 2022.

India's iron ore exports to the world's largest importer, China, were recorded at 2.46 mnt in May, increasing 20% m-o-m against 2.05 mnt in April.

JSW Steel was the largest exporter at 0.97 mnt, up by 80% m-o-m followed by Rungta Mines at 0.81 mnt.

Factors that pushed up India's iron ore exports in May'24

• Recovery in global iron ore prices: The surge in India's iron ore exports in May was facilitated by a recovery in global iron ore prices, providing a favourable environment for increased trade activity in the sector. BigMint's India's Fe 57% export index rose, recovering from $55.5/t FoB east coast India in early April to $65-66/t in early-May.
  
  

• Weakening Chinese steel margins: China's steel industry has been facing pressure from various fronts, including rising production costs, volatile steel prices, and stringent environmental regulations. These factors have contributed to a decline in steel margins, prompting steelmakers to seek cost-saving measures. China's crude steel production for April 2024 decreased by 7.2% y-o-y to 85.94 million tonnes (mnt) as compared to 92.63 mnt in April 2023, as per data provided by the National Bureau of Statistics (NBS). In April, steelmakers reduced their crude steel production due to weak demand from customers and declining profitability. Moreover, steel prices have been falling steadily, affecting steelmaker's profits and dampening market confidence.
  
  
• Preference for low-grade ore in China: In response to weakening steel margins, Chinese steel mills are increasingly turning to low-grade iron ore as a cost-effective alternative to high-grade ores.
  
  
• Lower discounts on low grade ore: A major Australian miner lowered the discount for lower-grade fines to 15% for May deliveries, down from 16.5% in April on improved Chinese demand.
  
  
• Higher iron ore production volumes in India: India's iron ore production volumes were recorded at 26.14 mnt in April 2024, up 7% y-o-y. On a monthly basis too, volumes witnessed an increase against 25.79 mnt in March 2024.
  
  

Outlook

Despite stable inventory levels, India's iron ore export market is expected to fluctuate due to falling margins. The clamour for higher discounts from Chinese buyers and increased portside stocks could potentially lower the overall volume of exports in June.