Indian iron ore export prices have slipped by up to 12% due to a fall in demand from China, which consumes almost half of Indian ore shipments.
Prices fetched by high-grade iron ore, with over 60% iron content, exported to China fell from $60-75 on February 11 to $55-65 on February 27, said an analyst with steelprices-india.com, a portal which undertakes real time analysis of metal and mineral prices. Landed cost of various grades of Indian ore in China witnessed a 5-10% decline.
The development is a matter of concern for Indian exporters such as Sesa Goa, Essel Mining, MSPL and Rungta Mines that are dependant on exports to China, the analyst said. China is one of the largest consumers of iron ore in the world with annual imports of over 400 million tonne (mt).
The Chinese economy is showing some signs of recovery after the government’s $585-billion stimulus package. This was expected to boost demand, however, the actual demand was much lower than projections, leading to a fall in ore prices, said the analyst who asked not to be named.
The Federation of Indian Mineral Industries (FIMI) data suggest that iron ore exports witnessed a recovery in the months of December and January when overall exports increased to 14 million tonne from 10-11 million tonne during the same period last year.
The February data is still being collected, but a FIMI official said that orders for ore from China has already dried up and stocks are piling up at ports.
Stock levels at Chinese ports have touched 60 mt, which is sufficient for two months at normal consumption levels. “We expect the fall in iron ore demand to continue for some more months,” said an official of a mining company on condition of anonymity.
According to the analyst quoted earlier, the Chinese mills have a huge inventory pileup. “Anticipating a major correction in prices of Indian iron ore fines in the coming days, the buyers are staying away from the market. This is putting immense pressure on prices,” he said.
SourcE: Economic Times
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