The country’s= iron ore imports are steadily closing in on exports, trends in the past three years show.
From 7.09 million tons (mt) in 2015-16, imports have spiked to 12.8 mt at the end of FY19, data released by the Union commerce ministry revealed. In contrast, exports of key steel-making ingredients have subsided from 30.48 mt to 16.19 mt in the comparable period, plummeting by 46.88 percent.
Imports of iron ore were driven by shore-based steel plants, which prefer to import more of higher grade ore. These plants imported larger quantities when the landed cost of the raw material was almost at par with domestic prices, which shot up to catch up with international prices.
As opposed to imports, exports of iron ore have fallen due to a fragile demand for low grade fines in international seaborne trade.
China’s steel mills pulled back imports of the baser grade ore as the government there tightened environmental regulations to meet emission norms. Indian producers also found it unviable to export richer grade ore as it attracted 30 percent duty.
However, the export outlook has improved in the last few months after a blast at Vale’s mines in Brazil shut off 70 million tons in annual supplies. The supply crisis has been magnified by a tropical cyclone striking Australia and impacting production at key mines. China is Vale’s biggest buyer of iron ore and to recompense the loss, it has scaled up buying from other markets, including India.
Global supply headwinds has meant that China is now buying more of lower grade fines from India. Inventory at China’s ports has touched multi-year lows and the country’s steel mills pursuing ramp-up plans are building up stocks.
This has revived export demand for inferior grade ore. Indian exporters are also finding their shipments profitable with international iron ore prices rocketing to five-year highs, sources said.
The outlook for exports have perked up as the international supply turmoil will not mellow anytime soon.
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