Exports of iron ore rose four-fold in 2016-17 to 24 million tonnes (mt) compared to six mt in the year-ago financial year. Exports were largely helped by a spike in international prices that touched a peak of $95 a tonne.
Strong price sentiment was fuelled by demand pick up in China where iron ore inventory at ports reached a record 133 mt, the highest since 2004. The surge in exports had sparked hope of revival in iron ore exports from India which has once been a leading player in the global seaborne trade.
However, the collapse in iron ore prices has doused hopes for exporters. Benchmark prices of iron ore tumbled to a six-month low of $61 per tonne, plunging 30 per cent from the February peak before rebounding 2.2 per cent to $64.
"Iron ore exports had picked up on bullish price trends. Even with the steep export duty of 30 per cent, miners were able to pocket margins of $28 per tonne. However, the slide in prices is a setback. At $60-65 a tonne, iron ore exports is not viable", said a leading exporter from Odisha.
Giriraj Daga, an investment manager with K M Visaria Family Trust said: "Iron ore prices are unlikely to rebound as China has cut steel production. Steel demand has suffered and thus will exert a downward pressure on iron ore prices. India is unlikely to regain its lost position in the seaborne trade as iron ore price outlook is subdued. Moreover, many key mines in Karnataka and Goa are still out of operation."
Iron ore exports from the country had peaked at 127 mt in 2011-12. Since then, exports have tanked with the government's protectionist measures like imposition of a 30 per cent export duty to conserve iron ore for domestic steel units. Iron ore exports fell to a historic low of five mt in 2014-15 when the country turned a net importer of iron ore.