Iron Ore Demand From China Drops After India Imposes Export Tax

By Debarati Roy - Jan 15, 2010 Jan. 15 (Bloomberg)

Iron ore producers in India, the world’s third-largest exporter, may offer lower prices as demand from Chinese buyers drops after the government imposed a tax, a trade group said.
Prices may fall to between $80 and $85 a metric ton, from $87 and $90 a ton, Siddharth Rungta, president of the Federation of Indian Mineral Industries said today by phone. Exports may decline 6.7 percent for the year ending March, from the previous year, he said.
India imposed a 5 percent duty on exports of iron-ore fines and doubled the tax on sales of iron-ore lumps to 10 percent last month to ensure enough supplies for its steelmakers. The tax may make iron ore from Brazil and Australia more attractive to Chinese buyers, benefiting suppliers including Fortescue Metals Group Ltd.
“The number of enquiries has come down,” Rungta said. “Buyers are apprehensive about buying from India. These three months starting January will be bad for exports.”
India’s exports may slip to 98 million metric tons in the year ending March, Rungta said. The nation exported in excess of 105 million tons in 2008-09.
Cash prices of 62 percent iron-content ore delivered to China’s Tianjin port rose to $131.20 a metric ton last week, the highest in at least 13 months, according to the Steel Index.