Exports of iron ore from India increased 38% in December 2008 on YOY basis as a result of increasing Chinese demand and various government incentives to boost the sales.
The Federation of Indian Mineral Industries (FIMI) has revealed that in December 2008, Indian iron ore exports recorded a remarkable increase of 38%, reaching 13.6 Million Tonnes from 9.8 Million Tonnes in December 2007, as reported by Indopia.
During April-December 2008, exports declined by 5.4% to reach 64.47 Million Tonnes from 68.15 Million Tonnes recorded during the same period in 2007. During the first half of December 2008, iron ore exports from India plunged 3.8% on YOY basis.
The iron ore exports from India bounced back in December 2008 following a decline since May 2008. This is primarily attributed to the rising demand from the Chinese buyers. Earlier, exports to China were growing slowly since May as the Chinese ports were piled up with the previous stocks. Moreover, the demand hampered as several steel mills closed down in accordance to the Middle Kingdom’s reduced industrial operations to bring down the pollution level for the Summer Olympics. But now, with the reopening of some steel mills in China, iron ore demand is surging again.
Further, the incentives announced by the Indian government to increase the overseas shipments also pushed the exports up. The government announced to cut the export duty on iron ore, bringing it to 0%, whereas duty on lumps was reduced by 10 percentage points to 5%. This boosted the exports. Reduction in railway freight was also announced by the Indian government, which further added to the growth of India’s iron ore exports.
The recovery shown by Indian iron ore exports made the figure for fiscal year 2008-09 appear relatively respectable. Earlier, the exports were predicted to decline by nearly 50% as compared to 104 Million Tonnes in fiscal 2007-08. However, now exports are expected to fall 25%.
According to a Research Analyst at RNCOS, “Out of its annual production of 207 Million Tonnes, India exports about 104 Million Tonnes of iron ore. Increase in exports of iron ore is proving highly profitable for the Indian exporters. However, situation was quite unfavorable till few months back when economic recession and high exports tariffs started to show worldwide.”
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