Iron ore exports have reached new highs in the last two months on the back of strong demand from China.Export shipments of iron ore in September were four million tonnes against 1.14 million tonnes in the same month last year. Over August 2020, the shipments were up 3 per cent.
Odisha miners have been booking orders since the end of July for shipments in September on the back of a spike in prices globally. The monthly average global price of iron ore fines (Fe 62 per cent) exported to China increased to $122 a tonne CFR (cost and freight) in August, as against $107 a tonne in July. Further, the average price increased to $124 a tonne (CNF China) in September.
While earlier, China had cut iron ore imports from India due to the simmering border conflict between both the countries and increased iron ore imports from Australia, in the last two months, the dragon has started buying again from India on a large scale — China accounted for 95 per cent of iron ore exports from India during this period, while shipments to Japan and South Korea stood at 0.07 million tonnes each.
Steel prices up
Steel companies have been increasing prices for the last four months due to the increase in iron ore prices.
Iron ore prices in India could rise further, with only five out of the 19 Odisha iron ore mines which were auctioned in March are operational as of date amid a high export demand, said India Ratings and Research.
Moreover, the one-month extended deadline for previous mine owners to exhaust their inventory ends this month.
Iron ore availability in the second half of this fiscal would depend on the pace at which new merchant miners in Odisha ramp up their output and ex-mine owners dispose off the accumulated stock and export demand, said the Ind-Ra report.
Industry participants who do not have captive iron ore mines could face risks in iron ore availability and price in the near term.
One thing that could ease supplies and soften international iron ore prices is the news of the rise in iron ore exports from Brazil in September. Also, Vale, one of the largest miners, has announced resumption of operations at the Viga concentration plant, which would bring 11,000 tonnes of fines per day back into the market.