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India may export 10-11 million tonnes iron ore pellets to China this year, says, traders

May 14,2019

India is expected to export 10-11 million tonnes of iron ore pellets to China this year against 9.5 million tonnes last year on good demand notwithstanding trade tensions with the key export market of the US, traders said Thursday. The price of a high-grade pallet of 64fe content with 3 percent aluminum content has also improved to USD 122-125 per tonne, up from USD 114-116 in February 2019, a trader said the Singapore Iron Ore Forum. High-grade pallets are in good demand but mining issues and export restrictions have kept India’s iron ore out of the high-demand Chinese market in recent years, traders pointed out.


In 2007, India was among China’s largest iron ore supplier with 100 million tonnes shipped, they said. Traders expect India to ship 10-11 million tonnes of pellet to China this year, up from 9.5 million tonnes shipped last year. “Pellet demand is good in China,” said a trading company executive. Pallet prices were gaining though these were still off from the October 2018 peak of USD 150 per tonne, according to one trader. Chinese mills are confident of buying Indian pallets even as their key market, the US, is under tariff-pressure, according to traders. About 5 million tonnes of pellet at Chinese ports awaiting deliveries to mills currently. The market is waiting for direction following President Donald Trump’s decision on Chinese imports and tariff rates, which are as high as 25 percent before another round of orders are placed.


One trader believes President Trump’s high tariff imposition on Chinese goods would impact Indian pellet shipments, while another felt the impact would be named as the Chinese mills have factored in the tariff impact and built a domestic demand, especially from the construction sector. While the outlook is positive for pellet trade, Indian producers of low-grade iron ore, 58fe, have missed the high price deals with the Chinese mills, according to the traders at Forum which focused on raw materials and markets prospects. Goa is not allowing export of low-grade iron ore while exports from the east coast are nominal.


There was a “strong viability” of exporting iron ore of 58fe to China at a discount to the 62fe Index price of USD 90 per tonne in recent weeks, said a Hong Kong-based trader. Iron ore 62fe Index price has doubled to USD 90 per tonne CFR China from a low of USD 45 in 2015. Chinese mills, having made strong profits recently, are now switching to higher grade ore which means low-grade Indian iron ore will be out of the Chinese market unless offered at a bigger discount. A Chinese trader noted the ongoing issues with mining licenses, logistics and transportation limitations faced by Indian iron ore sector.