Looks like most of the 8.8mt of ore imported by India from Australia came from FMG in 2018. Good to see FMG as a first mover into the country, which will give it an edge in consolidating its position in India’s supply chain as the country look to expand steel production to 300mt by 2030.
With iron ore leases expiring in March 2020 in India and as it stands a substantial amount of red tape for those iron ore producing tenements to be leased out, there could be much more ore coming from FMG.
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India's iron ore exports in 2018 fell by 37pc from a year earlier as mining was suspended in the country's largest iron ore producing state of Goa.
Exports in 2018 were at 18.27mn t compared with 28.91mn t in 2017, according to government data. Iron ore fines and lump exports fell by 47pc to 9.86mn t, while pellet exports dropped by 18.54pc to 8.42mn t.
Fines exports are likely to remain subdued in 2019 with no clarity on when the Supreme Court will allow mining to resume in Goa. But pellet exports may show an increase as a mining accident at Brazilian mining firm Vale's iron ore mine on 25 January is expected to squeeze global pellet supplies. Around 76pc of India's total pellet exports were to China in 2018.
Demand for Indian pellet peaked in China in September and October with prices at multi-year highs of $160/dry metric tonne (dmt) cfr China. Demand after the Vale accident for imported pellet has increased in China but price gains have been muted, as Chinese mills are operating on low profit margins and using more lower priced ores to save costs. Repeatable price of 64pc Fe Indian pellet are currently around $120/dmt cfr China.
But enthusiasm for pellet exports remains high as Indian producers may be able to make profits at current Chinese prices given the fall in Indian iron ore fines prices over the past few months, shrinking their cost of production. Several Indian pellet producers and trading firms such as Jindal Steel, BRPL, Essar Steel, KIOCL and Bagadiya Brothers are loading or waiting to load vessels with a total of around 370,000t pellet, according to shipping data on loadings at five east coast and one west coast ports that are key centres for dispatching ore cargoes.
Sharp gains in imports
India's iron ore imports posted a sharp increase in 2018 with large-scale producers such as JSW Steel stepping up purchases of overseas ores.
Iron ore imports were at 15.89mn t in 2018, up by 196pc from 5.36mn t in 2017. Imports of iron ore fines and concentrates were the main share of imports at 15.09mn t, up by 219pc.
Australia was the largest exporter of iron ore to India in 2018, selling around 8.86mn t, an increase of 1,073pc from 2017 when it had exported just 755,240t.
JSW Steel has been a major importer of Australian iron ore miner Fortescue's low-grade fines in 2018, which it has used economically to improve the quality of its furnace burden. Indian iron ore fines and lump have Fe contents above 60pc but often have inconsistent quality.
Brazil exported 2.44mn t iron ore in 2018, up by 68.46pc on the previous year, while South Africa's exports to India increased by 58.61pc to 3.37mn t. Indian producers mostly buy high-grade pellet feed concentrate and lump from these countries.
Demand for high-grade imported lump has fallen in the Indian market over the past month, as domestic lump prices have been falling while steel demand has been sluggish with orders turning tighter on policy uncertainty ahead of general elections in April-May.
FMG Price at posting:
$5.98 Sentiment: Buy Disclosure: Held
(20min delay)