September 08, 2008

Indian iron ore exports to dip due to port problems

Federation of Indian Mineral Industries foresees a drop of about 15% in iron ore export during 2007-08 due to handling problems in 2 iron ore exporting ports.

Mr Rahul Baldota president of the FIMI said that “Snags with loading equipment in Mormugao and an ore handling plant in Paradip port have cut about 1 million tonne to 1.5 million tonnes a month from exports. There could be a 15% to 20% fall in exports this year mainly because of the port problem."

Indian iron ore traded last week at USD 185 a tonne delivered in China versus USD 160 to USD 170 for Brazilian material and under USD 100 for Australian term prices. A global shortage of ships has pushed up freight rates, giving India a temporary advantage over rival Brazil for sales to China.

Mr Baldota said that "India is not able to really take advantage because of the port situation. The situation in Paradip has eased but Goa will take some time."

Mr Baldota added that costs were rising due to higher railway freight charges over the past year, while the strengthening rupee and export duties were also cutting into revenues. He said that "Our costs have gone up drastically."

According to Goa Mineral Ore Exporters Association, exports from Goa, which accounts for 40% of India's iron ore overseas sales fell by 15% between April and September to 10 million tonnes from the same period last year. Industry officials said that the port situation in Mormugao, which accounts for about 30% of India's iron ore exports, is not likely to be resolved for at least one month. One of the two ship loaders in the port has been out of action since July 2007.