Iron-ore exports from India may drop for a fifth straight year as higher taxes and freight costs make shipments unviable, the country’s minerals lobby said.
Shipments of the steelmaking raw material may decline 38 percent to 9 million metric tons in the year ending March, from 14.4 million tons, the Federation of Indian Mineral Industries said today in a statement. India may become a net importer this year with steelmakers including JSW Steel Ltd. buying as much as 15 million tons from abroad as local supplies dwindle, it said.
The country shipped 1.94 million tons in the quarter ended June 30, down from 3.26 million tons a year earlier. That coincided with falling world prices, and higher levies and freight costs.
India charges a 30 percent duty on iron ore for export, while railway freight on iron ore for export is 3.6 times the local levy, the FIMI said.
Iron ore with 62 percent metal content for immediate delivery at the Tianjin port in China is down 29 percent this year at $95.30 a ton, according to a price index compiled by The Steel Index Ltd. Citigroup Inc., Deutsche Bank AG and Morgan Stanley see lower rates through 2016 as supply expands.
Local supplies of high-grade ore in India, which mainly exports poorer quality fines variety, have been restricted by court curbs on mining in top producing provinces like Karnataka state in the south and Odisha state in the east, cutting availability of good quality ore and spurring imports by steelmakers.
While the federation in July 2013 had predicted India would become a net importer in the year ended March 31, shipments into the country were limited to less than 2 million tons.
JSW Steel, the nation’s third-largest producer, will import 6 million tons of iron ore, its first overseas purchase in bulk, as it isn’t able to procure enough in the local market. The company got a first shipment of 170,000 tons this month.