Why India's Iron Ore And Pellet Exports Surge?

May 01, 2023

According to reports, in March 2023, India's iron ore and pellet exports climbed to 4.36 million tons, an increase of 15% month-on-month and a sharp increase of nearly 60% year-on-year.
Why is the export volume of Indian mines soaring? There are mainly three reasons:
First, it comes from the demand of China's economic recovery. According to data released by the World Steel Association, in February, China's crude steel production increased by 5.6% year-on-year. Production at Chinese steel mills has picked up pace as infrastructure, construction and manufacturing activity in the country has fully recovered. According to data from the China Iron and Steel Industry Association, from January to February, the national average daily output of crude steel was approximately 2.86 million tons, an increase of 13.8% compared to the national average daily output of crude steel in December 2022. Chinese demand for iron ore remains strong. Fiscal Year 2022 (April 1, 2022 - March 31, 2023), China imported more than 18 million tons of iron ore from India, of which nearly 11 million tons of iron ore were shipped in the first quarter of this year (January-March 2023).
Second, low profits stimulate steel mills' demand for low-grade ore. Demand for lower-grade iron ore has increased as steelmakers try to cut costs as mainstream seaborne iron ore prices rise steadily. In mid-March, the CFR (cost plus freight) price of 62% iron ore in Australia reached a peak of US$133/ton. However, Chinese steel prices fell throughout March, with pressure on profit margins coupled with a surge in mainstream ore prices forcing mills to look for lower-cost alternatives.
Third, India's iron ore production and export momentum surged. Iron ore production in India has been growing since India removed export duties on low-grade iron ore and pellets. The increase in production of raw materials in India, in addition to meeting the increase in India's domestic crude steel production, has also ensured a greater export volume. The buoyant export market sentiment has further boosted the enthusiasm of Indian iron ore and pellet miners to produce.

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