Closure of orders from China because of Covid related restrictions and a high duty levy, saw Indian iron ore exports hit rock-bottom in September and October months of this fiscal. Data compiled by Ministry of Commerce and other trade sources show there were no exports for iron ore in September, while in October sales were barely 0.13 million tonnes (mt).
September and October of FY23 are now the worst two-month-period for Indian iron ore traders in the last four years (between FY20 and FY23), data accessed by businessline shows.
In October exports saw an 80 per cent drop y-o-y vis-a-vis last year when it stood at 0.63 mt.
Depressed numbers
Export for the seven months (April to October) of FY23 stood at 7.1 mt, down 64 per cent YoY. Exports for the even-month period of FY22 were 19.53 mt.
Data shows FY21 has been the best year for exports with September and October sales being 4.78 mt and 4.28 mt, respectively. The seven-month sales were 34.40 mt.
“There were no export orders in September with China market being closed because of Covid. In October, there was a slight recovery, but its barely something to cheer about. The market condition remains depressed even in November,” RK Sharma, Secretary General, Federation of Indian Mineral Industries (FIMI), said.
China is the largest buyer of iron ore (both low grade and high grade) from India and bought 21 mt iron ore and concentrates last fiscal, trade sources say.
“At this moment, it is hard to say whether the October sales were pre-booked orders waiting for clearance at the ports or fresh orders,” he added.
Duty Burden
According to Sharma, apart from China, a high export duty burden imposed here hit overseas sales and access to other markets. Low grade offerings, which is over 90 per cent of iron ore export is the worst hit.
The Centre in May raised the export tax on low-grade iron ore lumps and fines – with iron content below 58 per cent – to 50 per cent from zero. The duty on pellets was increased to 45 per cent (from zero). The move was then aimed at meeting rising local demand and to control inflationary effect on raw material prices.
“The duty has made Indian iron ore offerings very costly. Naturally with the slowdown in metal or commodity cycle globally such costlier offerings now have few to no takers,” he said.
Trade data
Interestingly, trade data also shows that the exports have been erratic since imposition of duty. Global recessionary pressures played its part too.
From 3.05 mt of iron ore exports in April (the highest so far, this fiscal), orders dropped to 2.70 mt in May. Post May, the decline was a sharp 88 per cent (month-on-month) to 0.31 mt in June, rose 61 per cent in July (MoM) to 0.51 mt; only to drop again, by 18 per cent the following month (August) to 0.41 mt.