NEW DELHI: Iron ore exports from India were down 53 per cent in the past two months as China, a major consumer, took better quality ore from Australia to feed its integrated steel plants, taking advantage of a slump in global prices.
Macquarie Research says after a surge in iron ore export to 49 million tonnes (mt) in March, these slumped to 23 mt in May. With seaborne ore prices down 40 per cent from the peak in late February, the Indian high-cost export is fading away. Shipments from Goa have become unviable and volumes from the East Coast have started diverting to domestic markets, it said.
Indian iron ore production saw 23 per cent growth in FY17 over a year before, at 190 m. The report forecasts production to grow to 206 mt, up 8 per cent. With declining export, it expects a domestic surplus of 18 mt in FY18, adding to the surplus of 14 mt in FY17.
The market for low grades is getting tough, as most steel mills are focusing on higher grades to increase productivity. Chinese steel consumption has been higher than expected and prevailing steel prices provide for respectable profit margins to these mills, Macquaire said.
Since the mining ban was lifted in India in 2015, mining companies here have gradually raised the output of low-grade ore, it said. International prices had gone up to as high as $80 a tonne in November 2016 and that supported the Goan mining industry. Indian miners’ cost of delivery to China is a little less than $30 a tonne.