December 02, 2008

Indian iron ore gets freight edge

Reuters quoted Sanjiv Batra CMD of MMTC as saying that India's iron ore exports to China have recovered as a shortage of ships has pushed up freight rates, handing India a temporary advantage over Brazil. The report sited Mr Batra as saying that Chinese buyers are now snapping up Indian ore, which has gained a distinct price edge. Mr Batra said "That advantage has come to us. And buyers would like to buy from India."

Mr Rahul Baldota president of the Federation of Indian Mineral Industries said that freight rates from India to China had risen to USD 30 to USD 35 per tonne from USD 20 in the last 2 months, but Brazilian exporters were facing about USD 65 per tonne. Mr Baldota said that "This advantage has come to us in the last 2 weeks. But this is a temporary phenomenon. I see the price levels sustaining for another 1 or 2 weeks. India's total iron ore exports should be 10% to 15% lower than last year.”

As per report, India's ore exports between April and June 2007 have fallen by about 9% YoY to 22.03 million tonnes as compared to April and June 2006. However, losses due to lower sales are likely to be offset in August 2007 due to a jump in international spot iron ore prices for 63.5% grades to USD 100 per tonne from USD 52 per tonne.

Sales had fallen after India imposed a duty of INR 300 per tonne on iron ore exports in the budget in February 2007. It later cut that to INR 50 for low grade ores below 62% iron content after protests from the local mining industry. Domestic steelmakers have been demanding curbs on iron ore exports as two thirds of which are bought by China to safeguard supplies for local users.

In 2006-07, India's iron ore exports were estimated at 93 million tonnes.