India’s iron ore pellet exports are expected to fall to zero following the imposition of a new export tax of 45 percent and being completely outpriced in major markets in China, SteelOrbis has learned from pellet producers across India. Also, exports of iron ore fines and lumps will stop as the export duty for all categories of iron ore has been imposed at 50 percent, while previously only lumps with above 58 percent Fe content were subject to an export tax of 30 percent.
Market sources said that China imported about 11 million of ex-India pellets in 2021-22, accounting for 70 percent of total pellet exports from the country, and the additional 45 percent tax factored into the current export price would make domestic pellet plants completely uncompetitive in all global markets.
India’s aggregate installed pellet production capacity is around 80 million mt, with annual production in the range of 60-70 million mt, and the domestic market will not be able to absorb an additional 11 million of export allocation rendered surplus in a year.
“The export tax will kill the pellet industry. India is already a high-cost producer owing to higher logistical costs. Pellet plants will have to cut output and in fact some export-oriented units might have to shut down,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“There is going to be a huge build-up of low-quality pellets with high alumina content which used to find buyers in China, but Indian mills do not accept such grades. We are looking at domestic pellet plant average capacity utilizations levels falling below 40 percent,” he said.