Imports are projected to be above 12 million tonnes in this financial year as the momentum will continue regardless of the surplus supply in the domestic market. India, home to plenty of iron ore resources and the 3rd biggest crude steel manufacturer, has contradictorily turned into a net importer of iron and steel..
During April-September, India imported iron and steel valued at $5.33 billion, exceeding its exports worth $4.22 billion. This has turned the trend of India being a net exporter of iron ore and steel products for the past 2 succeeding years. In the last FY, exports of iron and steel were valued at $11.24 billion, surpassing the $10.43 billion in imports. Between 2009-10 and 2017-18, India's exports of iron and steel logged a compounded annual growth rate of 12.07%, a report by the Indian Brand Equity Foundation (IBEF) stated, quoting the numbers sourced from the Ministry of Commerce.
According to the report, India has turned into a net importer of iron and steel due to robust demand in the production sector and an increase in infrastructure projects under implementation. India's transition into a net importer of steel is regardless the buoyancy in domestic crude steel output. Crude steel manufacture in the financial year 2018 reached an all-time high of 102.34 million tonnes, increasing 4.5% year-on-year. An estimate by the World Steel Association projects Indian steel demand to grow 5.5% in calendar 2018 to 92 million tonnes and 6% in 2019 to touch 97.5 million tonnes. By 2019, India is also assured to replace the US as the 2nd largest steel consumer, the association predicted.
But firm growth in steel demand is driving higher imports. The impact of higher steel growth is also felt in iron ore with steel companies showing rising dependence on imports. India imported iron ore worth $350.99 million in the financial year 2018. The same trend has followed into this FY.
"Domestic iron ore prices have firmed up significantly in the past 3 months. The gap between domestically sourced and imported ore is decreasing. And, shore-based steel plants are finding it feasible to import ore," said a senior official with a steel company.
Iron ore imports by India increased 190% to 6.34 million tonnes during April-August, data by the Pellet Manufacturers Association of India (PMAI) showed. Imports are projected to be above 12 million tonnes in this financial year as the momentum will continue despite the glut in the domestic market.
In the financial year 2018, iron ore sourced by steelmakers and other end-user industries stood at 8.6 million tonnes, 48% higher than in 2016-17. Imports of iron ore are on an upswing since steel plants located on the coast have shown an increasing tendency to import the key ingredient. Imports of iron ore have turned out to be a cheaper option for shore-based steel units compared to buying from the domestic market.