Reduced Chinese demand pulls down iron ore prices

Reduced Chinese demand pulls down iron ore prices


New Delhi: With China, the world’s largest importer of iron ore, unwilling to buy the mineral from India at higher rates, prices have come down to $185-190 a tonne from $190-195.

Chinese customers are reluctant to pay higher prices resulting in iron ore stocks at major seaports of that country rising to around 42 million tonnes (MT), up from 40.4 MT in the middle of last month, according to a report.

“Some suppliers are starting to lower their offer prices, with those for 63.5% Fe Indian iron ore fines now down to $185-190 a tonne China from $190-195 in recent days," the Steel Business Briefing (SBB) reports quoting Chinese traders.

At present, Chinese mills are more likely to consume their own iron ore reserves to maintain production, though these stocks are understood to be quite low.

With small mills buckling under the weight of high raw materials costs and limiting production, demand for imported ore has decreased to some extent, it pointed out.

“Customs statistics indicate China imported 29.77 MT of ore in October, down from 33.24 MT in September. And in the first 10 months of this year, China imported about 313.75 MT, up 16.65% from the same period of last year," it added.

Reduced demand from China would make the domestic steel sector happy as the major utilities have been clamouring for conservation of ore. Even the Steel Ministry favours conservation over exports, given the major capex plans of steel companies.

“The steel sector would need 138 MT of ore by 2011-12 and if the production level reaches 191 MT by 2019-20, the country would need 320 MT. So there is clearly a case for conservation," Secretary to the Steel Ministry R S Pandey told PTI.

“If it happens that the country was being constrained to import ore, then such a disadvantage would be painful for the Indian steel industry," he observed.

Pandey’s comments assume importance amid reports that the Union Cabinet would shortly take a view on the National Mineral Policy (NMP), wherein it is seeking to address the concerns of steelmakers. They have been vociferously demanding capping of iron ore exports to fructify their expansion plans.