Iron ore exports dip 16.5% in February

Low buying interest from China, huge inventory weigh

India’s iron ore exports fell in February to less than 0.9 million tonne (889,882 tonne), showing a decline of 16.5% year-on-year. The pellet export shipments were completely absent in February and low buying interest from China and huge inventory affected exports.

The pellet export shipments were completely absent in February except one cargo of Jindals, which seemed to make its way to their own plant in Oman. Although four offers for Indian pellets were put forward in February, no deal was concluded leaving the cargoes unsold.

“The major reason for the drop in exports was China’s low buying intent in the backdrop of increasing port inventories. A combination of tight credit conditions, subdued steel demand and diminishing concerns regarding security of supply allowed the port stocks to breach the 102 million tonne mark, putting enough pressure on the iron ore prices. The lower prices were not seemingly in the interest area of many suppliers who preferred to stay away from the market,” said Prakash Duvvuri, Head of research, OreTeam Research.

Currently, export duty on iron ore is 30% and recently the government imposed 5% duty on pellets.

In FY13, India exported 18 million tonne valued at about $1.8 billion. The country’s all-time high exports came in the year 2009-10, when exports hit 117 million tonne valued at about $10 billion. In FY13, Goa alone had contributed about 10 million tonne of iron ore to the total exports.

In the period between April 2013 and January 2014, Orissa alone exported roughly 8 million tonne (data as compiled by OreTeam).

In the coming days, the falling iron ore prices and limited storage space are likely to increase the pressure on traders to sell their iron ore, but at the same time steel mills may be waiting for the market to hit bottom before buying. The mills know that the port stocks are quite high hence they wouldn’t mind waiting for a bit more, Duvvuri said.

On the other hand, the pellets shipments were hit by the 5% export duty imposed on the commodity for exports. Putting together all the costs related to the export of pellets, the market price was not in the interest of the exporters and they preferred to stay away from the market, he said.

The total exports in 2014 have added up to 2.453 million tonne on the basis of the provisional data put together by OreTeam. Major exporters in February have been Rungta Mines (157,380 tonne) and MMTC to Japan (206,700 tonne).