Global demand for Indian iron-ore soars, driven by Chinese Appetite and duty removal

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Global demand for Indian iron-ore soars, driven by Chinese Appetite and duty removal

Ferrous 18 Jul 2024 11:38 AM IST moneycontrol

India's iron ore fines and lump exports reached a three-year high of 36.5 million tonnes (MT) in FY24, up from approximately 15 MT in FY23, representing a 145% rise year on year. Iron ore pellet exports climbed by nearly 80% year on year to 11.3 MT in FY24, up from 6.3 MT in FY23, according to data. According to statistics, China receives almost 90% of all exports, followed by Malaysia and Qatar.

China's iron ore imports increased by 8.1% in the first two months of 2024 compared to the previous year, owing to steelmakers refilling supplies to meet production demands during and after the Lunar New Year holidays.

The surge in Indian iron ore fines exports to China was driven by robust pre-Chinese New Year restocking and encouraging economic signals in China. Additionally, the elevated costs associated with high-grade iron ore imports from alternative sources and narrow profit margins for Chinese mills raised the demand for India's competitively priced lower-grade ore.

India's iron ore production, a key steel-making ingredient, comprises both low-grade and high-grade ores, but the country has significant reserves of low-grade iron ore. Low-grade iron ore typically contains a lower percentage of iron content and higher impurities than high-grade ores, leading steel companies to opt for higher-grade ores, which have over 62% Fe.

The elimination of the 50% export duty on iron ore and 45% duty on pellets, along with the cessation of the 15% levy on finished steel exports in November 2022, significantly boosted export activities. The imposition of these levies had rendered exports economically unfeasible. There was a surge in shipments from India immediately after their removal. China emerged as the primary destination for approximately 90% of total exports, underscoring the consistent demand for low-grade Indian iron ore from China despite the constrained profit margins of Chinese steel manufacturers, which have remained stable over the years.

India achieved a record-high iron ore production of approximately 280 MT in the recently concluded fiscal year, a notable 10% jump year over year. With the rise in domestic iron ore production, its export availability has expanded.

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Global demand for Indian iron-ore soars, driven by Chinese Appetite and duty removal

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