Smaller steelmakers in India are advocating for a halt in iron ore exports, following a surge in sales to Chinese mills that has led to increased local prices. Last year, Indian exports rose by 170% to 44 million tons, primarily directed to China, coinciding with a rise in domestic demand for the raw material. This situation has prompted the most affected segments of the industry to request restrictions from authorities to safeguard their margins.
Anil Nachrani, president of the Chhattisgarh Sponge Iron Manufacturers Association, emphasized the need for the government to impose a ban on all forms of iron ore exports. He expressed concern that continued exports to China would detrimentally impact India’s steel industry. Nachrani stressed the importance of India focusing on exporting steel rather than raw materials like iron ore.
According to Nachrani, smaller mills in at least five major manufacturing states have united to petition the steel ministry, especially as many have begun operating at a loss. These second-tier producers, accounting for around 40% of national output, are facing significantly higher input costs compared to larger operations. India’s top mills, benefiting from better pricing negotiations for inputs like iron ore and coal, often possess their own mines.
Any measures taken by India to restrict exports could potentially support iron ore prices, which have been among the weakest-performing major commodities this year. The government has previously intervened to safeguard the interests of local producers, such as imposing a 50% export tax on all grades of iron ore in May 2022, which was later revoked after six months.
While the Indian steel ministry did not provide an immediate response to requests for comment, the expansion of capacity among major steelmakers in India has heightened local demand and intensified competition for raw materials at auctions and in the open market. However, softer end-user demand for steel has posed challenges for smaller players, particularly in competing with major producers possessing captive coal and iron ore mines, noted Deependra Kashiva, Director General at the Sponge Iron Manufacturers Association, a national body.
