India's iron ore exports drop to 8-months low in Apr'24. Know why?

• April pellet exports drop 50%, lowest since Sep'22
  
  
• Decline in Chinese demand impacts Indian ore exports
  
  
• Volumes may increase amid global restocking needs
  
  

Morning Brief: India's iron ore fines and lumps exports were recorded at 2.24 million tonnes (mnt) in April 2024 against 3.19 mnt seen in March, showing a m-o-m drop of around 30%. Notably, April volumes were at an eight-month low since similar volumes were last recorded in August 2023.

Meanwhile, pellet exports halved m-o-m to 0.20 mnt in April 2024, against 0.40 mnt in March, the lowest since September 2022.

Country-wise exports

China was the largest importer in April 2024 but its volumes more than halved m-o-m to 1.39 mnt from 3.11 mnt in March amid tepid home demand and a sliding yuan, which has fallen more than 1.5% since January 2024.

Company-wise break-up

Rungta Mines was the largest exporter in the month under review with 0.72 mnt, which was a 85% increase m-o-m over 0.51 mnt in March. JSW Steel followed with 0.54 mnt, down by 26% m-o-m.

Factors that dragged down India's iron ore exports in Apr'24

• Consistent drop in India iron ore export prices: India's Fe 57% export index fell from $81/tonne (t) FoB east coast India in February to $63/t in March and further to $61/t in April. The steady decline in prices can be attributed to slack demand from China, where steel production and consumption have likely hit a peak. And, global pressures are mounting on the country to decarbonise its most polluting industries, which include steel. Flooding in southern China also suppressed consumption, causing iron ore to soften. Seaborne shipments demand declined as buyers had completed their restocking ahead of the Labour Day holidays starting 28 April.
  
  

• Chinese IO port inventories remain on higher side: Because of the low demand, iron ore inventories at China's major ports remained at around 142 mnt on 2 April, hovering at a 1-year high level. The Qingming holidays in China observed in the first week of April contributed further to the slack demand.
  
  
• Discounts on low grade ore widen: India generally exports iron ore grades below Fe 58%, and which do not attract any export duty. Discounts on these widened to 27-28% in April over iron ore swaps against 15-18% in early March. It may be mentioned that export contracts get fixed on future price indications - for instance, on the basis of the May, June indices. Higher discounts dragged down export offers and volumes.
  
  

Outlook

India's iron ore exports may witness a slight pick-up in May, considering that global prices had risen ahead of China's Labour Day holidays, on restocking needs. For instance, these were at $110/t CFR China in mid-April and at a higher $119/t by the month-end, up $9/t.

However, much will depend on Chinese demand revival post - the Labour Day holidays. Chinese demand sways India's iron ore exports since the major chunk of it gets consumed there.