A 360 Degree Outlook of India’s Iron Ore Exports & Imports in FY19

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Iron ore production in India in FY 2019 surpassed 204 mnt (estimated) compared to FY18 which was 201mnt, this year the iron ore production grew by 1.49 percent. Odisha, alone took the biggest chunk of India’s iron ore production that is 111.3 mnt of iron ore in FY19 which accounts for more than half of India’s total iron ore production which is almost 54.55%.
In FY 18, Goa the smallest state of India produced around 8 mnt of iron ore, but in the beginning of FY19 after the mining ban by Supreme Court of India, no iron ore mining activity was carried out, as a result of which India’s total iron ore production growth dipped slightly. The iron ore producing states including Karnataka, Chhattisgarh, and Jharkhand maintained their performance as per last year.
However, a significant increase in iron ore production by Odisha kept India’s iron ore production on a positive growth track on Y-o-Y basis.

India State-wise Iron ore production FY19 & FY18
India State-wise Iron ore production FY19 & FY18

National Mineral Development Corporation (NMDC), India’s largest India’s largest iron ore producer recorded 32.47 mnt in FY19, amid various hurdles including closure of Donimalai mines in Karnataka from the past 5 months. Out of total iron ore production, NMDC, Chhattisgarh produced 23.39 mnt and remaining 9.08 mnt from NMDC, Karnataka mines.
The previous year, figures were as 23.57 mnt and 12.01 mnt respectively. This is the third consecutive year in a row the company has crossed production and sales 30 mnt mark.
Rungta Mines, India’s largest private merchant miner has produced around 24 mnt iron ore in FY’19 (down by around 14%), Essel Mining & Industries increased its production by more than two-fold to around 10 mnt and Serajuddin Mines production fell by 24% to around 8 mnt in FY’19.
SAIL and TATA jointly accounts for around 23% of the country’s total iron production which are mining from their own captive mines.
Odisha mining corporation recorded a sharp increase in its Iron ore output to around 10.5 mnt in FY19

Iron Ore Production
India Iron Ore Production in last 5 Years

Iron Ore Export in India in FY19

Iron Ore Export
India Iron ore and Pellet export of last five years

Indian iron ore exports are continuously tumbling after reaching 32.52 mnt in FY17. In FY18 it fell by 24.13% to 24.68 mnt. In FY19, it again decreased to 16.14 mnt reporting a dip of 34.58% compared to previous year.
As per the data maintained with SteelMint, total 16.14 mnt of iron was exported in FY19 of which 9.28 mnt was Pellet and 6.87 mnt was Iron Ore. In comparison to the number of previous financial years, it was found that exports of Iron Ore fell by 56.3% while exports of Pellet increased by 3.54%.

India's top Iron ore exporting Companies
India’s top Iron ore exporting Companies

In FY 18 Vedanta, NMDC, and Fomento Resources were the top iron ore exporters, but this year (FY19) they could not keep with their last year’s performance and Brahmani River Pellets (BRPL) and Rungta Mines took over them by exporting large quantities of pellets amid high demand from China.

India Pellet Export
India’s Top pellet Exporting companies

China continuous to remain largest buyer of Indian pellets as well as iron ore. India exported around 12.11 mnt of iron ore to China in FY 19, however in FY18it was 19.87 mnt which shows a decrease in exports by 39.05%. But still, China alone accounted for a share of around 75% in total Indian iron ore export.

Iron Ore Countries
Top Buying Countries of Indian Iron ore

After China, Japan is the second largest buyer of Indian iron ore with share of around 6.3% closely followed by South Korea.

India’s Paradeep Port remained remain the largest iron ore exporting port in FY’19
In FY’19, Paradip port’s iron ore export increased by 4.65% reaching around 6.98 mnt while in FY18 is reportedly 6.66 mnt. Mormugao port is on the second spot at 2.26 mnt and Mangalore is on third spot reporting exports at around 1.57 mnt.

Factors for export volumes declined in FY’19

  • Effect of Goa Mining Ban
    Cancellation of 88 iron ore mining leases by the apex court of India, turn out to have a adverse effect on India’s overall iron ore exports in FY 19. Prior to this order, Goa had permissible mining capacity of 20 mnt pa, but after the apex’s courts order, all iron ore extraction activates came to a halt.
    The mines were only permitted to export previously mined iron ore (mined before imposition of mining ban 15th March 2018), on which royalty was paid, and material lying at jetties, with the halt in new mining operations.

Delay in resumption of exports from NMDC
NMDC’s LTA (Long-term agreement) to export iron ore to South Korea and Japan had expired owing to which the miner recorded nil exports for a period of five months from Apr’18 to Aug’18.
On 25th April’18, NMDC received approval for supply of iron ore to Japan and South Korea for a period of three years i.e from Apr’18 to 31 Mar 2021. Later the miner resumed exports in Sep’18.

Iron Ore Import in India in FY19

India's Iron ore and Pellet Import of last 5 Years
India’s Iron ore and Pellet Import of last 5 Years

Iron ore imports in India have surged by 41.73% in FY19, according to the data maintained by SteelMint. The impost mostly includes iron ore. Prior to this, Indian iron ore imports hit record high at 15.07 mnt in FY15. Next year in FY16, iron ore imports were fallen as low as 5.80 mnt. It remained less than 6.5 mnt by the end of FY17 and increased slightly in FY18 at around 9.7 mnt.

Top 5 Iron ore Importers of India in FY 19

JSW Steel, the largest steel maker of India has largest share in India’s total import of iron ore. In FY19 alone, company’s iron ore import increased by 76.25% from 5.10 mnt to 8.98 mnt. While other iron ore imports of India holds a small share compared to JSW steel.

Major Iron Ore importing countries of India

Import of Australian iron ore by Indian steel makers jumped more than two-fold in FY19
In FY18, iron ore imports from Australia were around 3.27 mnt, but in FY19 it increased by 119.88% to 7.19 mnt. While imports from other countries to India observed a slight decrease in FY19.

Highest Demand For Australian Iron Ore in FY19
Highest Demand For Australian Iron Ore in FY19

Top-5 Iron ore iron ore importing ports
Iron ore import at Krishnapatnam port increased by 72.52% to 5.21 mnt in FY19 against 3.02 mnt in previous year. While significant grown in iron ore import can be observed at other major ports in FY19 including – Jaigarh (4.1 mnt), Kandla (1.24 mnt), Hazira (0.55 mnt).

Port-wise Iron ore import of India
Port-wise Iron ore import of India

Factors for increased Imports

Iron Ore price movement in FY19
Raipur, Barbil and Bellary Prices
Raipur, Barbil and Bellary Prices
  • High discounts: Amid high domestic iron ore prices, major Indian mills preferred importing ore from Brazil, Australia, etc. High discounts on low-grade ore on Australian ore kept Indian mills active for imports. Data shows, most of the imports are of low grade (57%). This is because steel mills enjoy high discount from miners for low-grade ore, which can vary from 35-40% on the index price of 62%. Later in the last quarter, discounts narrowed on increased Chinese buying.
  • Suspension at NMDC Donimalai: In another setback for domestic iron ore supply, operations at NMDC’s Donimalai mines in Karnataka have remained suspended. On 3rd Nov’18 NMDC lease got expired and was later renewed for the next 20 years but state govt has asked NMDC to pay 80% premium on iron ore sale value from Donimalai to the Karnataka state Govt. Amid levy dispute, mining operations are on hold. This might serve another reason for the hike in imports.
  • Interim suspension of Odisha mines: Owing to suspension at few major mines in Odisha over delayed penalty payment in the illegal mining case can also be attributed as one of the reason. Operational Odisha mines and NMDC raised prices during the period of mines suspension. Less availability of high domestic ore resulted in an increase in import volumes.