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China taps cheaper iron ore options in Australian market

China taps cheaper iron ore options in Australian market
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First Published: Fri, Aug 22 2008. 12 12 AM IST

Pricing issues: An iron ore mine in Orissa, owned by Kalinga Mining Corp. India exported about 93mt of iron ore in the fiscal year ended March 2007, out of which about 75% went to China. Photograph:
Pricing issues: An iron ore mine in Orissa, owned by Kalinga Mining Corp. India exported about 93mt of iron ore in the fiscal year ended March 2007, out of which about 75% went to China. Photograph:
Updated: Fri, Aug 22 2008. 12 12 AM IST
New Delhi: Chinese demand for Indian iron ore has all but vanished over the past six weeks, hit by rising exports of cheaper ores from Australia and a higher Indian export tax, industry officials said on Thursday.
Rahul Baldota, president of the Federation of Indian Mineral Industries, said Australian ore was selling for about $25 (Rs1,090) per tonne cheaper than Indian ore, currently priced at about $115 per tonne for 63% iron content ore grades. “There is absolutely no demand for iron ore from India to China,” Baldota said. China has been India’s biggest market for iron ore.
Pricing issues: An iron ore mine in Orissa, owned by Kalinga Mining Corp. India exported about 93mt of iron ore in the fiscal year ended March 2007, out of which about 75% went to China. Photograph: Adam Ferguson / Bloomberg
“Australia is shipping a lot of quantities there, so the preference for iron ore from India is just not there. This is the situation over the last one and a half months,” he added.
India exported about 93 million tonnes (mt) of iron ore in the fiscal year ended March 2007, out of which about 75% went to China.
Baldota said that exports to China could halve in the financial year ending March 2009 if the current situation continued. He said India’s June exports to China fell to 7.8mt from 10.6mt in the previous month. “The figures are not yet ready for the last two months, but I expect that it would have fallen further.”
Indian iron ore for China was commanding a price of about $140 per tonne about four-five months back.
R.K. Sharma, secretary general of the Federation of Indian Mineral Industries, said Chinese buyers have rarely been quoting against Indian iron ore export tenders for the past month. He said one reason for the situation was the Indian government’s decision to raise an export duty on iron ore in June.
The move imposed a uniform 15% export duty on iron ore, replacing a fixed levy of Rs50 per tonne on lower grades of iron ore and Rs300 per tonne on higher grades, in a bid to ensure affordable supplies for local industry.
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First Published: Fri, Aug 22 2008. 12 12 AM IST