 "According to industry estimates, in 2024, tea imports from Nepal stood at 15.95 million kg (mkg). A significant quantity was of the orthodox variety that competes with the Darjeeling tea. In 2024, Darjeeling tea production was at 5.6 mkg.")
The ceasefire in the Israel-Iran conflict has brought a sense of cautious optimism among Indian tea producers and exporters, who had seen orthodox tea prices slide amid rising tensions.
Orthodox tea prices had declined in the wake of the crisis but are now showing signs of recovery, even as exporters and traders reassess risks and the demand outlook.
At the Kolkata auctions held this week, the average price of orthodox leaf teas was Rs 290.66 per kg, compared to Rs 269.40 per kg last week. Moreover, 78.55 per cent of the teas on offer were sold at the auction held on June 24 and 25, as against 49.26 per cent last week.
Anshuman Kanoria, chairman, Indian Tea Exporters Association, said a high percentage of the teas were unsold last week as exporters were in “wait and watch” mode. “But the moment the ceasefire announcement came on Tuesday morning, ahead of the auction, demand picked up. Buying has resumed for the pending orders from Iran and there is optimism.”
However, he added that some shippers had decided to hold back their cargo for a bit to see how the situation develops. “But the signals are positive.”
Indian Tea Association (ITA) chairman Hemant Bangur said the demand environment was uncertain last week.
“But I think that is behind us now. The exporters are back at the auctions covering for quantities they had committed to Iran and the CIS countries. But obviously everybody is cautious,” he said.
Traditionally, Iran has been one of the top markets for Indian tea. It is believed to be a 30 million kg (mkg) market.
In 2022, tea exports to Iran stood at 22.21 mkg. This dropped to 5.92 mkg in 2023 as Iran stopped registering contracts for Indian tea. In 2024, however, tea exports to Iran increased to 9.24 mkg.
But direct export figures to Iran do not fully reflect the size of the market, as a significant volume is routed through the UAE, a major re-exporting hub.
Even as prices have recovered from the lows of last week, they are yet to return to levels seen before June 13, when Israel launched a surprise attack on Iran.
Himanshu Shah, chairman, M K Shah Exports, said tea prices have improved from last week but remain below pre-conflict levels. The next few weeks will be crucial in determining the direction of the market. M K Shah is one of the largest exporters and producers of orthodox tea in India.
Mohit Agarwal, director, Asian Tea Company, said cargo was lying at the Nhava Sheva port in Mumbai. “The buyers are back and enquiries are coming in. The trade should start from Saturday.”
“This was a temporary setback and the expectation is that the market would go back to pre-war level next week.”
The season had started on a strong note for orthodox tea. The average price realised for orthodox leaf at the Kolkata auctions for Sale 17 to Sale 24 was Rs 317.32 per kg, compared to Rs 293.69 per kg in the previous year. Sale 17 was held on April 22, and Sale 24 was held on June 10 and 11.
The drop in prices last week, however, prompted some producers to convert to the CTC variety. A large tea producer said, “The plan was to expand the production of orthodox tea. But right now, we are making more of CTC. If things settle down, we will make more of orthodox.”
Orthodox tea is mostly exported. In 2024, India produced 118.67 mkg of orthodox tea out of a total production of 1,284.78 mkg; production of CTC stood at 1,149.21 mkg.
