India's imposition of iron ore export tariffs has limited impact on China

"After the tariff adjustment, the tariff is too high! We won't export any more, and we don't have any big orders on hand." "before the tariff increase, the pellet price is not attractive, and after the tariff increase, it will basically not be exported." "subsequent export will be extremely difficult, unless the price can make up for the high tariff, or the government gives subsidies"
On May 22, India announced the adjustment of import and export tariffs on iron ore and steel products, which attracted widespread attention in the market. Many Indian mines said that imposing high export tariffs was tantamount to pressing the "pause button" for India's iron ore exports. However, insiders believe that the impact of India's adjustment of iron ore export tariffs on China is generally limited.
The tariff adjustment measures are mainly to reduce the import tax rate and increase the export tax rate to control the price of domestic industrial products in India. Among them, India raised the export tariff of pellets from 0 to 45%, imposed 50% export tariff on all fine ores and lump ores (previously, only 30% export tariff was imposed on iron ores with a grade of more than 58), and increased the export tariff on finished and semi-finished steel products and semi-finished products such as pig iron, hot rolled coil, cold rolled coil, bar, stainless steel and alloy bar from 0 to 15%, and abolished the original export tariff on metallurgical coke 2.5% - 5% import tariff on coking coal and ferroalloy.
According to the analysis of Mysteel, this adjustment has a certain impact on 58% of Indian fine ore and pellets imported by China, and the impact on pellet import is greater than that of fine ore. After the implementation of the new tax rate, China's import of Indian pellets may show a significant reduction.
According to the data provided by Mysteel, from 2019 to 2021, China imported 23.85 million tons, 44.67 million tons and 33.42 million tons of iron ore from India each year, accounting for 2.2%, 3.8% and 3.0% of China's total iron ore imports respectively. According to customs statistics, in the first four months of this year, China imported 5.36 million tons of iron ore from India, down 71% year-on-year, accounting for 1.5%.
"Since September last year, China's import of Indian iron ore has fallen sharply. Even if the monthly import volume drops to zero in the short term, it will not have a big impact on China's iron ore supply." The iron ore analyst of Lange Iron and steel network pointed out that in recent years, the overall change of India's iron ore production and export volume is not big. China's iron ore imports from India also showed a shrinking trend.
Mysteel pointed out that in terms of quality and compression resistance, Indian pellets are not as good as Chinese made pellets. In the past, Indian pellets mainly relied on price advantages to occupy the market. If the price of Indian pellets is significantly increased due to tariffs, the loss of price advantage will prompt Chinese steel mills that originally used Indian pellets to use domestic pellets with higher cost performance. It is reported that from January to April this year, China imported a total of 3.162 million tons of Indian pellets. The gradual increase in domestic mine production can make up for the reduction in pellet imports to a certain extent. India's fine ore was mainly sold at low prices before, and the demand for it in the Chinese market was not high, and the impact of tariff adjustment on the supply of the Chinese market was limited. (reporter Tang Li)