Iron Ore-ShFE rebar ends flat; spot ore up on freight hike

Thu Mar 31, 2011 7:41am GMT

By Nick Trevethan

SINGAPORE, March 31 (Reuters) - Shanghai steel rebar futures rose 0.4 percent on Thursday, on course for a loss of around 1.5 percent on the quarter, while iron ore indexes gained on the prospect of costlier freight charges for Indian ores.

The most active rebar contract on the Shanghai Futures Exchange, October, rose 19 yuan to 4,813 yuan a tonne by 0140 GMT, reversing the previous session's losses.

The contract remains near an eight-session high, having hit a four-month low of 4,627 on March 22, but is down 1.5 percent this quarter.

Late Wednesday, Baoshan Iron & Steel , China's top listed steelmaker, posted an 8.3 percent rise in quarterly profit, and said it expected growth in global steel demand to slow this year. [ID:nB9E7EP00X]

"The important thing to note is that it's growing, not slowing. Maybe it's not growing as quickly as before but the rates we saw in 2009 and 2010 were unsustainable, built on all that stimulus money," said a trading source in Sydney.

"It looks like demand growth will moderate. We still have a bit of an inventory hump to get over, which in the short term may cap steel prices, in particular in China and even cause a lull in iron ore demand in the next three to six months, but it's temporary."

Key iron ore indexes, based on spot transactions in China, rose sharply on Wednesday.

India's iron ore exports fell for the eighth straight month in February because of a continuing ban on shipments by its key Karnataka state and exports are likely to face further pressure as the country hikes freight rates again.

Exports from the world's No. 3 iron ore supplier dropped 18.6 percent from a year ago to 10.137 million tonnes in February, data from the Federation of Indian Mineral Industries showed on Wednesday.

In addition, Indian Railways said it will impose a "busy season" charge of 7 percent on iron ore freight rates from April 1 to June 30 and from Oct. 1 to March 31.

Platts 62 percent iron ore index IODBZ00-PLT jumped $5.50 cents to $175 a tonne, including freight, and the Steel Index's 62 percent benchmark .IO62-CNI=SI gained $2 to $170.50.

Metal Bulletin's 62 percent gauge .IO62-CNO=MB rose $1.74 to $169.71. (Editing by Himani Sarkar)
Tags : steel plant, steelmaking, Chinese iron ore market, raw material, busy season charge, levy on coal and coke

Iron ore exports down 18.60 pc in Feb to 10.13 MT

Wed, 30 March 2011, 1:33 PM

New Delhi, Mar 30 (PTI) Continuing its declining trend for the eighth consecutive month, India''s iron ore exports in February has gone down by 18.60 per cent to 10.13 million tonnes (MT).

The outbound shipment of the vital steel-making raw material during April-February period also declined by 17.98 per cent to 85.43 MT, mainly on account of export ban imposed by Karnataka government.

According to the data compiled by industry body Federation of Indian Mineral Industries (FIMI), the country''s shipment declined by 18.60 per cent in February against the same period last year. Exports were recorded at 12.54 MT in February, 2010.

"The industry has been suffering due to the ban on exports imposed by Karnataka in July. Also, the raise in export duty on iron ore to 20 per cent in the Budget has added salt to the exporters'' injury and its impact will be felt in March exports ," FIMI Secretary General R K Sharma told PTI.

In the Budget, duty on fines was hiked four-fold to 20 per cent while on lumps was upped to 20 per cent from 15 per cent earlier. The country had shipped 117.37 MT of iron ore during the last fiscal.

Also, on account of exports ban imposed by Karnataka shipments declined by 17.98 per cent to 85.43 MT during April-February this fiscal.

In July last year, Karnataka government had slapped the ban in the midst of a controversy generated over illegal mining activities in the state. Karnataka is one of the largest iron ore exporter of the country.

India has been exporting iron ore to China, Japan, South Korea, Europe and other countries.

FIMI wants roll back of export duty hike on iron ore

Tue,8 Mar, 2011, 02.52PM IST,PTI

NEW DELHI: Hitting out at the Finance Minister for increasing export duty on iron ore, the Federation of Indian Mineral Industries has written to Pranab Mukherjee requesting a roll back to the pre-Budget level.

"We would be grateful if you consider sympathetically rolling back the increase in export duty to pre-Budget 2011-12 level," FIMI Secretary General R K Sharma wrote in a letter to the Finance Minister.

The government has quadrupled export duty on fines to 20 per cent in the Budget for 2011-12. India had shipped over 100 million tonnes iron ore in 2009-10 and 70-80 per cent of that was in the form of fines. For lumps, the duty has been raised to 20 per cent from 15 per cent earlier.

"The hike in export duty will keep the domestic iron ore industry in a suspended animation in which illegal miners would reap benefits," Sharma said, adding that such increases keep iron ore industry on tenterhooks and do not allow it to generate surplus to invest in exploration.

Indian steel makers mostly use lumps and the requirement of fines does not exceed 30 million tonnes a year as two major firms, SAIL and Tata Steel , use fines produced from captive mines. The plants, which do not have own mines, procure fines from non-captive standalone mines, including NMDC.

"To supply lumps to the domestic industry, fines have to be evacuated from mines. Since domestic demand is inadequate, only outlet is export. In the absence of an attractive export market, a large portion of iron ore produced will be wasted," Sharma wrote.

Total iron ore demand by the Indian steel companies is about 102 million tonnes against the domestic production in 2009-10, including stock-pile at the mine-heads, of 299 million tonnes.

The Railways has also raised freight on iron ore meant for exports by Rs 100 a tonne to Rs 1,600 a tonne with effect from March 1.

"The increase in export duty and railway freight have affected the iron ore industry very adversely," Sharma wrote.

With steep rise in export duty, miners will have to depend on home market

March 1, 2011, 21:43 IST BS Reporter

Ore for exports will have to cater to domestic needs

The government has increased the ad valorem export duty on iron ore to 20 per cent — from five per cent for fines and 15 per cent for lumps. This has come as a major blow to the miners.

The government’s message, however, is loud and clear — value add or suffer. The move is seen as an attempt to force miners to sell more domestically rather than eye the international market.

Advisor, Federation of Indian Minerals and Industries (Fimi) S B S Chauhan said, “This is not good for exporters. Such a high duty cannot be absorbed by the sector and passing it on to the consumer is not an option since prices are a function of demand and supply in the international arena. Clearly, increasing the availability in the domestic market is the agenda and this will now happen.”

India exports close to 100 million tonnes of iron ore, majority of which makes it way to China. NMDC, India’s largest iron ore miner, exports 3 million tonnes to the Japanese and Korean steel mills and Sesa Goa, part of the Vedanta Group, is a major supplier to the Chinese market.

Senior vice-president at Edelweiss Capital Prasad Baji said the duty jump was too steep. “Ore pricing is related to the international market and India is a price-taker. In that sense, India really cannot decide on the price at which it would want to supply. Profitability will be hit if miners continue to export,” he said.

The move will complement steel production in India, which has grown over 6 per cent in 2010 while demand has grown at 9-10 per cent annually.

Chairman of Steel Authority of India (SAIL) C S Verma said, “Higher export duty on iron ore has been a long pending demand of the steel industry and the budget has taken care of the issue.”

Miners, who are investing in setting up pellet and sinter plants, have welcomed the withdrawal of export duty on the value-added iron ore, known as pellets. Chairman and Managing Director, NMDC, Rana Som said they were setting up two pellet plants with a combined capacity of 3.2 million tonne. “One million tonne will be used for internal use and the remaining is for commercial purpose,” he said.

“FIMI has been asking the government to remove the export duty on pellets. It is good for miners who are value adding and selling iron ore. Now, we will definitely see more investment in setting up of pellet plants,” said Chauhan. Iron ore, in its powdered form (fines), are fed into the pellet plant and converted into iron ore pellets and sold to steel makers. This product is then directly fed into the blast furnace to make steel, along with other raw materials like coking coal and limestone.

“China buys iron ore fines from India as the country has already invested in setting up of pellet and sinter plants. Therefore, they do not need much of pellets. However, there is some demand for iron ore pellets and this move will have a little positive impact for the companies looking to value add iron ore,” said Baji. (sourced:Business Standard)

Tags:iron ore miner, Indian iron ore exporters