Indian iron ore exports to China surged in 2020, but India’s own needs keep it from being a key supplier
- India exported 88 per cent more iron ore to China last year, but it accounted for only 1.8 per cent of China’s import total
- Increase in iron ore exports was commercially opportunistic, with Indian exporters taking advantage of China’s strong demand and sharply higher prices
India is not poised to become a major new supplier of iron ore to China, despite an increase in iron ore trade between the two countries in 2020, according to analysts.
China’s imports of Indian iron ore rose 88 per cent last year to 44.8 million tonnes, from 23.8 million tonnes in 2019, according to full-year data released by China’s customs agency on Wednesday. But the increase of 21 million tonnes was a mere 1.5 per cent of the total 1.4 billion tonnes of iron ore that China imported in 2020.
That is nowhere near enough to transform India into a key supplier, analysts said.
India’s protection of its domestic iron ore supply for its own steelmaking industry is also expected to stop it from becoming a major net exporter. Other hurdles include India’s 30 per cent export duty on iron ore having more than 58 per cent iron content, which makes it expensive for buyers such as China.
We don’t see India as a meaningful alternative for Australia or Brazil in the long term
While the Chinese government is making plans to both expand and diversify its supply of iron ore outside of Australia and Brazil, at the same time looking for alternative raw materials such as scrap steel to supply its domestic industry, seeking a greater supply from India is simply not a viable option, analysts said.