Mumbai: Iron ore exporters from India are advocating long-term contracts with Chinese importers.
“There is need to benchmark contract with China, as we have long-term agreements world-wide for iron ore exports, MMTC chairman and managing director Sanjiv Batra said on the sidelines of a conference.
Chinese steel industry is expected to cross 490 million tonnes this year and is expected to add 60-70 million tonnes every year. China is expected to play an active role in benchmarking prices, he said.
Spot iron ore prices have touched $100 mark for the first time. At the moment there is 100% difference between long-term and spot prices. “There will be substantial jump in benchmark prices in FY08,” he said.
Batra advocated the policy of long-tem contract and said that very soon a time will come when there will be a convergence between the spot prices and long-term contracts. “At the moment, a majority of ore is sold on the basis of long-term contract.
However in the next two to three years the industry would move towards convergence between the long-term and spot prices. In FY07, India’s iron ore exports were estimated at 93 million tonnes. India is the third-largest supplier of iron ore to China after Australia and Brazil.