• Shipments fall to 12.68 mnt in Apr-Sep'24 from 14.8 mnt in year-ago period
• Exports to China drop over 20% y-o-y in H1FY'25
• Recovery in Chinese steel market sentiments in Oct'24 offers hope

Morning Brief: India's iron ore exports, minus pellets, during the April-September 2024 (H1FY'25) period were approximately 12.68 million tonnes (mnt), as per data collated by BigMint. Iron ore exports declined nearly 15% y-o-y compared with 14.8 mnt in H1FY'24.

Iron ore exports are predominantly to China, the world's leading steel manufacturing country, which accounts for over 90% of shipments from India. Notably, shipments to China in H1FY'25 were recorded at around 11.6 mnt, a decline of over 20% y-o-y as against 14.6 mnt in the corresponding period of last fiscal. Still, China accounted for over 91% of Indian exports of iron ore during the period under review.

The country's top exporting companies recorded sharp increases in shipment volumes in H1, as per data. Among the leading exporters, Rungta Mines recorded the highest volumes in H1FY'25 at 4 mnt compared with 2.76 mnt in H1 of the previous fiscal.

Similarly, JSW Steel ramped up exports to 2.7 mnt from 1.1 mnt in H1FY'24. However, Vedanta recorded exports at around 700,000 t in H1 of this fiscal, down from 2.9 mnt in the same period of the previous fiscal.

Why exports dropped y-o-y in H1?

• Lower Chinese crude steel production: China's crude steel production dropped 3.3% y-o-y in January-August 2024 to over 690 mnt, as per World Steel Association data. Crude steel production in August fell 10% y-o-y to around 78 mnt. Data shows that that India's exports to China have fallen by nearly 45% compared to June on declining steel production in China due to the real estate slump and continuous downtrend in new home starts. This had a direct impact on iron ore demand.

• High iron ore inventory at Chinese ports: As per data from consultancy Mysteel, iron ore stocks at major Chinese ports on 26 September stood at an extremely high level of over 150.5 mnt. However, inventory declined to around 148 mnt towards month-end. Slow drawdown of port inventory due to maintenance downtimes amid weak steel margins has led to port stocks piling up, especially due to the fact that China's iron ore imports in January-August reached around 815 mnt, an increase of over 5% y-o-y.

• Price decline keeps export market subdued: BigMint's India Fe 57% iron ore fines export index fell from $81/t FOB eastern India in February 2024 to $56/t FOB in August - a decrease of over 30% in just about six months. Prices hovered around

$60-70/t FOB in H1FY'24. The decline in global iron ore prices dampened India's export prices. Indian suppliers are on the higher end of the cost curve globally due largely to higher mineral transportation and logistics costs in India as well as higher royalties and embedded taxes. So, rapid decline in export prices naturally dampens the market.

• Sharp fall in shipments from Karnataka: Low-grade iron ore fines exports from miners in Karnataka fell sharply during the period under review. As per BigMint data, exports from Krishnapatnam Port fell from 2.2 mnt in H1FY'24 to mere 0.05 mnt in H1 of the current fiscal. This, too, contributed to the overall decline in exports.