Driven by a slippage in exports of iron ore primarily to China, volumes at India?s major ports decreased 1.4% on a year-on-year basis in June to 44.78 million tonnes, the first decline on a yearly basis since August 2009, when the traffic was at 45.4 million tonne. Other factors like a continuous downward trend in the Baltic Dry Index (BDI) added to local factors like shortage of wagons to transport coal also took their toll.
Traffic slipped on a sequential basis by 6% in June, show data compiled by the Indian Ports Association. Data chiefly include products like iron ore, petroleum, oil and lubricants, fertilisers and coal, besides container cargo. This sequential decline was mainly driven by petroleum and oil products and iron ore, which reported a fall of 9% and 36% in June to 13.8 million tonne and five million tonne respectively.
Iron ore demand has significantly declined due to lower demand from China?s steel sector. ?Mormugao, a major iron ore exporting port on the west coast, has reported a substantial decline in iron ore by 63% in June 1.5 million tonne over May 4.17 million tonne. Total traffic volumes at Mormugao declined 52% sequentially to 2.2 million tonne in June,? said Jignesh Dhabalia, an analyst with India Capital Markets.
The appreciation in China?s currency has hit importers? margins, impacting imports. Also, steel consumption in China has gone down due to low housing demand and lower real estate requirements. ?The Chinese government has reduced subsidy on steel products, making it difficult to compete with global peers,? he added.
In the international market, BDI, a measure of bulk freight rates, has witnessed some pressure in June. Its downward trend too has a negative impact on bulk port traffic volumes. ?Besides, some local factors come into play like shortage of wagons for transporting coal from the port to the respective destinations. For example, at Paradip Port, due to wagon shortage, evacuation of coal from port premises has been delayed,? said Alok Prusty, port expert, Mantrana Maritime Advisory.
However, container volumes for June stood at 0.61 million twenty-foot equivalent units, a 9% increase on a yearly basis. Sequentially, container volumes decreased by 6%. The slowdown in growth of container volumes is due to lower demand of goods from developed countries. ?Early this year, retailers were importing to pile up inventory, forecasting a growth in demand. But a lower demand in developed countries has led to retailers keeping a check on their imports, leading to a decline in container volumes sequentially,? said Dhabalia.
In June, container volumes at Chennai rose 31% on a year-on-year basis to1,27,000 TEUs, but JNPT, India?s largest container port, reported a marginal increase in container volumes of 4% to the tune of 340,000 TEUs. On a sequential monthly basis, container volumes at Chennai increased 2% and for JNPT declined by 9%.