Iron ore exports from India may hit 5 million tonnes (MnT) in Q1 FY20 on high demand for low grade from China, according to SteelMint analysis.
The January collapse of mine dam waste in Brazil operational at Vale followed by recent cyclone in Australia is expected to disrupt supply of high grade seaborne iron ore by about 75-80 MnT in 2019. These incidents have led iron ore prices to hit 5 years high at USD 95.05/t CFR China for 62% iron ore fines. Market participants highlight that market is reacting on lack of prompt shipments for April from Australia.
Sharp rise in high grade iron ore prices have led Chinese mills to hunt for low grade iron ore, when steel prices have not increased in the same proportion. Fe 58/57% iron ore fines prices have increased by USD 5-10/MT in last 2 months to USD 60/MT, CFR China or equivalent to USD 50/MT FOB India.
High demand for low grade ore from China has turned Indian iron ore exporters active. Many merchant traders and big miners like Rungta and Essel have increased their shipments to east coast. Also, traders like SM Niryat, Bagadiya Brothers, Kashvi Power are booking decent quantities.
It is to be noted that low grade ore (below 58% Fe) does not attract any export duty where as above 58% Fe iron ore have an export duty of 30% from India.
According to iron ore export data maintained by SteelMint, India exported about 2.15 MnT in Q4 FY19 and 2.28 MnT in Q1 FY19.
Looking at iron ore movement domestically, we expect iron ore exports to touch 5 MnT in Q1 FY20.