Google Website Translator Gadget

Monday, October 10, 2011

Indian Iron Ore exporters losing grounds in Chinese market

Monday, 10 Oct 2011

BS reported that triggered by the bullion sell offs and overall negative sentiments for commodities across the board, iron ore prices dropped from its recent highs by more than 6% in the last 10 days.

The one week long national holiday of china has cooled the price volatility a bit and iron ore prices will take a direction only after China reopens on 8th October.

Both Chinese steelmakers and traders expect the market to further drop citing the global financial turmoil and reduced steel demand.

The Chinese mills are currently hit with tight liquidity pressure from the banks. The sharp drop in rebar prices in the international market might keep the mills away from fresh purchases of iron ore. Currently unsold cargos in high seas carry a higher cost and the recent sharp drop in ore prices has prompted the traders to reduce the offer price considerably to arrest further losses.

In spite of all these negative factors affecting the iron ore prices, china still imports a considerable amount of iron ore major from Australia, Brazil and India. Especially, Indian iron ore gives the Chinese medium size mills the best performance cost ratio which can be attributed to smaller parcel size, short lead time and better quality.

But the recent measures taken from Indian government is slow and steadily stripping of these advantages from Indian ores thereby costing a huge revenue loss for the Indian exporters. Iron ore stockpile in china posted a decrease after several weeks and stood at 93 million tonnes approximately. Indian stock pile continued its decline with current stock level of around 12 million tonnes across the major ports.

The export duty which was at 5% and 15% respectively for fines and lumps has been increased to 20% on both. This hike had taken up a major share of price advantage what Indian ores had in the market. In addition to this, several mines across India is still non-operational which has dried the availability of the material considerably.

(sourced from BS)

No comments: