News Room - Steel Industry

Posted on 13 Jun 2008

Indian iron ore prices drop on lower China shipments

India's prices of iron ore for export have dropped 8-11 percent as stockpiles build up at Chinese ports, trimming demand from its leading customer, the head of a trade body said on Thursday.

"There is a demand, but the interest for Indian cargo has been weak," Rahul Baldota, president of the Federation of Indian Mineral Industries told media. China is the main market for India's iron ore exporters such as Sesa Goa Ltd. India exports about 90 million tonnes of iron ore, and most of the sales are done on a spot basis.

The export price of ore has dropped by $10-$15 a tonne to $115-120 in the past six weeks, Baldota said, adding a combination of factors had led to the fall. "Australian cargo is available in the spot market. Secondly, stocks are lying at various ports in China and prices were also very high, which cumulatively led to this," he said.

Stockpiles of imported ore at Chinese ports hit an all-time high of nearly 80 million tonnes last month, and severe congestion there is contributing to a rise in freight rates.

Contract price settlement talks are going on between Australian miners such as BHP Billiton Ltd and Rio Tinto and their Chinese clients. Baldota expects demand to normalise once prices are settled.

"Chinese steel mills have already piled up stocks they need ahead of (India's monsoon) rains," Pawan Burde, senior analyst at Angel Broking, said.

Indian iron ore exporters expect demand to pick up after the Olympics in August. In 2007, India imposed an export duty of 300 rupees per tonne on higher ore grades and 50 rupees on lower grades to discourage exports and conserve future supplies for domestic steel makers.

Indian steel makers have requested the government to impose a 15 percent export duty on iron ore. Meanwhile, iron ore output at three mines run by India's leading miner NMDC Ltd has stopped after Maoists rebels blew up transmission towers, hitting supplies to domestic and Japanese buyers.