India's heavy duties on iron ore exports are expected to have a "tiny" impact on Chinese steel supply as the country is reducing its heavy reliance on Indian iron ore while diversifying its domestic and international supplies.

The Indian government raised export tariffs on May 22 with a hike to 50 percent, from 30 percent, on exports of iron ore and concentrates and a 45 percent duty imposed on iron pellets to increase domestic availability, the Economic Times reported on Saturday.

While India has been a source of iron ore imports for China, with tens of millions of tons traded annually in recent years, the latest move by the Indian government imposing tariffs will not have a substantive impact on the Chinese steel industry as it has made efforts to reduce dependence on any single supplier for safety concerns.

The reduction of exports of Indian pellets to China may be obvious and some traders have made it clear that they will not execute related contracts after June, according to Chinese steel information provider Mysteel.

However, due to the high prices and sales to the European market, Indian pellets are significantly different from domestic pellets in terms of quality and pressure resistance.

At present, the sales price of domestic pellets is 1,300 yuan ($ 194.24) per ton, equivalent to about $176 per dry ton. If the price of Indian pellets increases by 45 percent, it is expected that steel mills currently using Indian pellets will adjust to more cost-effective domestic pellets, according to Mysteel.

China's continuously shrinking iron ore imports from India have been fairly small and can easily be replaced by other sources of supplies. China's iron ore imports in 2021 were 1.12 billion tons, and just 33.42 million tons came from India, accounting for 3 percent of the total.

From a larger perspective, India's restrictions mainly have a greater impact on import of pellets while Chinese enterprises can make up for the shortage by seeking resources from Brazil, Australia, Kazakhstan and other countries, Wang Guoqing, research director at the Beijing Lange Steel Information Research Center, told the Global Times on Sunday.

China's imports of Indian iron ore have been significantly reduced since September last year. According to statistics from the General Administration of Customs, between January and April 2022, China imported 5.36 million tons of iron ore from India, down 71 percent year-on-year, as prices of iron ore fall to a more sustainable and reasonable level and the government clamps down on market speculation and hoarding.

As the proportion of India's iron ore in China's steel consumption continues to shrink, even if monthly imports come to zero in the short term, their impact on the domestic supply of iron ore has been greatly reduced, or almost no impact, experts said.