Iron ore exports from Paradip rises threefold in FY14

In November, Business Standard reported that port aims to export 5.5 mt iron ore

Outbound shipment of iron ore fines and pellets from Paradip port surged nearly three times to 5.6 million tonne in the year ending March 2014, from historical low of 1.83 million tonne (mt) in the year ago period, supported by weak rupee, improved supplies and demand for pellets.

The shipment figure is in line with the forecast by Paradip port. In November, Business Standard reported that the port aims to export 5.5 mt iron ore.

Out of the total export figure, around 4 mt was iron ore fines while another 1.6 mt was iron ore pellets, data from port sources said. In the previous year, there was no export of pellets from Paradip.

Pellets are produced from dusty iron ore fines and are used as raw material for steel making. They can be used in place of sized iron ore in blast furnaces and are priced higher than fines.

While global and local demand for iron ore and pellets remained similar, it was improved supplies that helped boost the traffic, miners said.

“At 30 per cent duty, it is insane to export iron ore. The increased shipment is only because of steady output and despatch of some old stocks,” said an official of a large iron ore mining company.

Though official figures for Odisha iron ore output for 2013-14 are yet to be published, trade sources indicate a production of around 70 mt for the last fiscal, including captive consumption by companies such as Tata Steel, Steel Authority of India Ltd (SAIL) and Jindal Steel and Power Ltd (JSPL). In the previous fiscal, the iron ore production in the state was 62 mt. During 2012-13, average iron ore prices remained around $140 a tonne. It slipped to $130 a tonne in last financial year, on improved supplies globally amid weak demand from Chinese steel makers. However, despite the fall in prices, a weaker rupee contributed to rise in iron ore shipments from Paradip, miners and export brokers suggested.

In August last year, the rupee hit its lowest level against the dollar and remained weak for at least three months, offering a glimmer of hope for frustrated iron ore exporters to offload some of their stocks during the period.

Apart from fines, export of iron ore pellets by coastal producers gave a fillip to the shipments amid slack demand.

As exports of pellets rose taking advantage of zero duty, the Union government in January imposed five per cent export duty on pellets based on petition of steel companies which argued that such shipments would create shortage for the raw material in domestic market.