Indian export tariff hikes to strongly impact Chinese iron ore market

Tuesday, 01 March 2011

The India government has announced that as of February 28 the export tariffs on Indian fine ore and lump ore will both rise to 20 percent, while the export tariffs on iron ore pellets have been cancelled. The previous export tariffs on Indian fine ore and lump ore were five percent and 15 percent respectively.

After the adjustment, if we calculate the price on the basis of the current Indian ore (Fe 63.5 percent) price of $170/mt FOB, the export costs of fine ore will increase by $22-25/mt. Thus, Indian iron ore traders' profits will be hit strongly, and they may even incur losses. According to previous experience when India adjusted its export tariffs, the increased export costs will be passed on to Chinese traders by Indian miners and traders, and this would be expected to provide support for the currently weak Chinese iron ore market. Since India started to restrict its iron ore exports from 2007, its iron ore export tariffs have been adjusted constantly, while at the same time the share of iron ore imported by China from India has continued to decline.

Share of Indian iron ore in China's total iron ore import volume from 2000:

After the Spring Festival, the price of imported Indian ore for China started to decline gradually. In line with the recent weakness of the construction material market in China, the prices of imported iron ore have begun to fall, with the price of Indian fine ore (Fe 63.5 percent) falling to $188/dry metric ton CFR in late February from $198/dry tons CFR in mid-February. At present, purchase volumes from steel mills in China are on the low side.

Spot prices and CFR iron ore prices from India to China since 2009:

Indian iron ore export tariffs adjustment from May 2007 to February 2011:

Tags: iron ore , raw mat , China , India , Far East , Indian Subcon , imp/exp statistics , quotas & duties , steelmaking , trading , mining , East Asia and Pacific , South Asia, share of Indian iron ore, China's total iron ore import, data
(sourced:steelorbis)

India hikes iron ore export duty to 20 pct

Mon Feb 28, 2011 8:47am GMT By Thomson Reuters

* Industry body says exports will be uncompetitive
* Shares in producer Sesa Goa slide

MUMBAI Feb 28 (Reuters) - India hiked export duty on iron ore to 20 percent from 5 percent for fines and from 15 percent for lumps in its budget on Monday in a move to curb exports and likely to push red-hot global prices higher.

India, the world's third-biggest iron ore exporter, wants to conserve the natural resource for domestic consumption.

"This will make the exports of (Indian) iron ore uncompetitive in the global market," said R.K. Sharma, secretary general of the Federation of Indian Mineral Industries (FIMI).

Steel Minister Beni Prasad Verma called for curbs on exports of iron ore on Friday and Karnataka, the country's second-biggest producing state, has a ban on shipments which is currently being contested by exporters in the Supreme Court.

India's iron ore exports have already slumped on the ban by Karnataka, with sales down 24.8 percent in December to 9.7 million tonnes from a year ago.

Exports during the April-December period fell 17.02 percent from a year earlier to 64.4 million tonnes. The country usually exports around 100 million tonnes per year.

Two other states, leading producer Orissa and Chhattisgarh, which accounts for 5 percent of India's annual shipments, have asked the federal government to allow them to ban exports.

The hike in export duty in the budget for the year to March 31, 2012 was widely expected as the country tries to underpin its rapidly-growing economy with investment in infrastructure.

The government would prefer states to focus on better regulation of the sector and incentives for increased domestic use of the resource -- moves which target better illegal production instead of export bans which hurt all producers.

FIMI's Sharma said the export duty would deter buyers.

"This measure could be counter-productive, and would make overseas importers shy away from buying from here," he said.

Shares in iron ore miner Sesa Goa extended losses on the duty imposition to hit a 52-week low.

India hiked freight rates for iron ore exports by 50 percent to 1,500 rupees per tonne on Jan. 27 but kept it unchanged in Friday's Railway Budget.

Spot iron ore prices extended losses on Monday after slumping 5 percent from mid-February last week, with Chinese steelmakers expecting prices to fall further on demand uncertainties.
(Reporting by Siddesh Mayenkar; Editing by Jo Winterbottom)

Iron Ore-Spot prices flat on demand concerns

Mon Feb 28, 2011 3:46am GMT, Reuters

SHANGHAI Feb 28 (Reuters) - Spot prices of iron ore stood unchanged on Monday after slumping 5 percent from mid-February, with Chinese steelmakers expecting prices to fall further on demand uncertainties.

Indian ore with 63.5 percent iron content was quoted in China at $191-193 per tonne including freight, unchanged from last Friday, traders said, but demand remained murky as Chinese steel mills hoping for more falls are refraining from making large bookings.

"We can't tell how the market will go so far. Demand is weak and steel mills still don't want to buy unless steel prices rise strongly," said an iron ore trader in Shanghai.

Last week, steel mills in China stayed on the sidelines of the market and a few deals were sealed with Indian suppliers at below $190 per tonne including freight.

Uncertainty regarding steel demand and prices have triggered more concern among steel mills, who are expecting iron ore prices to break $180 per tonne in the near future.

The benchmark rebar contract for October delivery on the Shanghai Futures Exchange SRBV1 crawled 0.5 pct higher to close at 4,893 yuan ($744.3) per tonne by the midday break from the previous close, but was still near a two-month low.

Three global iron ore indexes also fell last Friday. The Platts' 62 percent iron ore index IODBZ00-PLT dropped for the seventh straight session to $183.5 per tonne, $1.25 lower than the previous close and a the lowest since Jan. 17.

Metal Bulletin's 62 percent index .IO62-CNO=MB edged down $1.72 to $181.86 per tonne, and the Steel Index's 62 percent gauge .IO62-CNI=SI stood unchanged at 184.1 per tonne, both hitting their lowest since Jan. 19. ($1=6.574 Yuan) (Reporting by Ruby Lian and Tom Miles; Editing by Jonathan Hopfner)

Tags:Shanghai Futures Exchange, The Platts iron ore index, Metal Bulletin, The Benchmark rebar contract

Iron Ore-Rally stalls as China buying slows; India state seeks ban

Fri Feb 18, 2011 8:44am GMT

* Steel mills and traders cautious

* Indian 63.5 pct ore quoted below $200/tonne

* Iron ore swaps fall for second session

* Another Indian state seeks export ban
(Adds Chhattisgarh seeking ban, comment, updates rebar prices)

By Ruby Lian and Manolo Serapio Jr.

SHANGHAI/SINGAPORE, Feb 18 (Reuters) - Spot iron ore prices eased on Friday, as top buyer China stepped back after a recent surge in raw material costs and steel prices recoiled on slow end-user demand.

Iron ore prices have risen around 13 percent this year, adding to gains of more than 40 percent in 2010, but a decline in price offers from sellers and sharp falls in forward swaps suggest prices may have hit a tentative peak under $200 a tonne.

"Offers have fallen below $200 per tonne by the end of this week after steel mills and traders held back from buying more," said an iron ore trader in China's eastern Shandong province.

"A few steel mills have changed their minds and refused to sign deals after verbally agreeing to buy material from traders earlier."

Offers for Indian ore with 63.5 percent iron content dropped to $196-198 per tonne, including freight, on Friday, from as high as above $200 earlier this week, trading sources said.

Chinese steel prices had risen alongside iron ore, backed by anticipation of a pickup in demand when construction activity resumes. But purchases from end users have remained slow, triggering a correction in prices.

The most active rebar contract for October delivery on the Shanghai Futures Exchange closed at a three-week low of 4,985 yuan a tonne on Friday, down 3.5 percent for the week. The contract touched a series of record highs last week.

Rising iron ore inventories at major ports have also weighed on spot prices. China's iron ore imports reached a record of 68.97 million tonnes in January.

OUTLOOK NOT BEARISH

Supply squeeze from India and firm demand from China had spurred the rally in iron ore prices, forcing steelmakers to pass on higher cost to customers.

Another Indian state, Chhattisgarh, is looking at banning iron ore exports, joining top producing state Orissa in considering halting shipments to meet domestic demand.

"There's probably a lot of investors looking for reasons to sell right now, but this news is going to hold that profit-taking for the time being," said Mark Pervan, senior commodity analyst at ANZ Bank in Melbourne.

Iron ore price indexes, which global miners use in setting quarterly supply contracts with mills, stayed near record highs, but forward swaps fell sharply for a second straight session on Thursday. The Steel Index's 62 percent iron ore benchmark .IO62-CNI=SI was steady at $191.90 a tonne, including freight, a record level reached in the previous session. Platts' 62 percent iron ore index IODBZ00-PLT eased 50 cents to $192.50, and Metal Bulletin's 62 percent index .IO62-CNO=MB rose $1.01 to $191.70.

Prices of Singapore Exchange-cleared forward swaps slumped for all 24 months covered by the contracts, with the March-to-August contracts showing the biggest losses, reflecting growing concerns on spot prices in coming months. The March contract slid $6.38 to $175 per tonne and April fell $5.25 to $163.50.

However, some analysts still expect China's iron ore appetite to bounce back with the country looking to produce a record of 660 million tonnes of crude steel this year. "We estimate iron ore spot prices to go higher, propping up contract prices for the second quarter," Le Yukun, an analyst with BOC International Securities said in a research note.

Le also estimated that average import prices would rise 15 percent this year and 5 percent in 2012. The China Iron & Steel Association said steel prices are expected to rise in the near term as raw material will remain costly and steel demand, both at home and abroad, will pick up gradually.
(Reporting by Manolo Serapio Jr.; Editing by Manash Goswami,sourced:Thomson Reuters)

Tags:iron ore top buyer, offers, rebar contract, Shanghai Futures Exchange,steelmakers,ANZ Bank,market analyst, BOC International

Iron Ore-Shanghai rebar, iron ore prices at record

SINGAPORE,Feb11,2011,Reuters
Shanghai steel futures rose to a record for a fifth day in a row on Friday as index-based spot iron ore prices bolted to all-time highs on tight supplies and strong demand from top buyer China.
Chinese steelmakers are boosting production in anticipation of a pickup in demand when construction activities restart in spring after halting in winter.

"People are pushing up prices because the cost of iron ore and coal are increasing and spring is approaching which means the resumption of construction activities in China," said an iron ore trader in China's eastern Shandong province.
The most active reinforcing bar, or rebar, contract for October delivery on the Shanghai Futures Exchange was up 0.5 percent at 5,213 yuan per tonne by the midday break, after peaking at 5,230 yuan earlier.

Most Chinese rebar exporters have stopped selling overseas and have turned to the domestic market given soaring prices at home, traders said.
Spot rebar is being sold at 4,800 yuan per tonne in northern China and at almost 5,000 yuan in the south, the Shandong trader said.
"Most steel mills are producing in full capacity which means there could be a big surplus of these steel products if demand is weak," he added.

RECORD IRON ORE
The surge in Shanghai rebar futures followed iron ore price indexes reaching record levels on Thursday.
Global miners Vale and Rio Tinto use the indexes in setting quarterly iron ore contracts, which is likely to hit a record in April-June given the recent surge in spot prices.
Vale and Rio price quarterly rates using the average index-based price for the past three months one month before the start of the relevant quarter.
Platts' 62 percent iron ore index IODBZ00-PLT has averaged $176.5 a tonne, cost and freight delivered to China, from Dec. 1 until this week, up more than 18 percent from the September-November average.
Platts' index rose $1.50 to $190.25 a tonne on Thursday, and with the bull trend intact, it could test $219 over the next three months, said Reuters market analyst Wang Tao.
The Steel Index 62 percent iron ore benchmark .IO62-CNI=SI climbed $1.60 to $188, and Metal Bulletin's 62 percent gauge .IO62-CNO=MB jumped $1.79 to $185.90.
BHP, Rio Tinto, Vale as well as Australian iron ore producer Fortescue Metals Group "are shipping as much as they can" while cargoes from No. 3 supplier India are crimped by an export ban in Karnataka and transport restrictions in Orissa, Commonwealth Bank of Australia said in a note.

India's Supreme Court is likely to rule on the Karnataka ban this month, which if lifted, could dampen the rally that has pushed up price indexes by 11 percent so far this year, after gaining more than 40 percent in 2010.
The Karnataka ban has been in place since last July, shrinking India's iron ore exports for a sixth straight month in December.
Indian ore with 63.5 percent iron content was being offered in China at $190-$192 a tonne, including freight, up from $188-$190 earlier this week, said Chinese consultancy Umetal.
That grade could hit $200 next week, said a Shanghai-based trader who saw offers of as high as $197 per tonne.

"But we may see some correction in March. Some mills are not buying because credit is getting tighter and the government is bent on controlling price increases," the Shanghai trader said.
China raised interest rates for the second time in six weeks on Tuesday to tame stubbornly high inflation that threatens to unsettle global markets.

Iron ore upswing may not last as China mulls raise in output

Sunday, 13 February 2011
Iron ore prices , which have been steadily climbing to touch $200 per tonne, may cool off in the long run as China is all set to increase iron ore production. The Dragon has just identified 4-5 billion tonne iron ore mines near Mongolia and this may impact their buying pattern in the global market. Basant Poddar, MD of Mineral Enterprises, said: “The current upswing may not continue for long as China is trying to bring new mines into production. Since China is the largest producer of steel and is a large buyer of iron ore from the global market, the new development is expected to influence their purchases.

Since they buy a substantial quantity of iron ore from India, a drop in their offtake could have a bearish effect on Indian exports.” A similar view was expressed by RK Sharma, secretary general of Federation of Indian Mineral Industries, who added that China will continue to play a big role in influencing global raw material prices. “Globally, there is a supply crunch of iron ore. This is expected to drive prices up further in the coming days. The Chinese have, so far, not been active in the global market due to the New Year-related activities,” Sharma said. In the next few months, the outlook on prices is expected to remain bullish as the global steel industry is led by the revival in demand from the Chinese steel makers. H Noor Ahmed, partner of Trident Minerals, said that the current upward price movement is a “momentary phenomenon” and is largely expected to be led by China. “However, we are now disturbed with the closure of iron ore mines in Karnataka which is affecting domestic supplies,” he added.

The trading community expects prices to remain firm in the next few months. “We are noticing a general uptrend in steel input prices due to the recovery in Europe and the US. China, the world’s largest steel producer, too is expected to continue its growth. This is likly to firm up prices in next few months. For Indian steel companies that rely on the market to get ore, this imply a hike in production costs,” said an official of the Indian arm of a leading global trading firm.
(source:TheEconomicIndiaTimes)

ICEX iron ore March 2011 contract prices were up 1.20% to trade at Rs 8,069 per tonne

Indian Commodity Exchange (ICEX) on Saturday launched iron ore futures contract along with Multi Commodity Exchange.

ICEX iron ore March 2011 contract prices were up 1.20% to trade at Rs 8,069 per tonne while April 2011 contracts also traded at Rs 7,628 per tonne. The contract will be on monthly expiry basis with a trading unit of 100 dry metric tonne (DMT). The delivery unit is 5,000 DMT. In the international markets, the spot Australian benchmark iron ore price hit $ 185 per tonne on Friday while Indian iron ore price with 63.5% iron content was quoted at $190 per tonne.
Total volume of all the three contracts March, April and May 2011 was 246 lots (24,600 tonne) valued at Rs 19.50 crore on the first day of trading.

“Based on the run up to launch of Iron ore contract, trade volumes on first day of trade on ICEX were robust with good participation and liquidity seen in its March and April contracts,” Sanjay Chandel, CEO, ICEX, said.
“In coming days we will see more physical market participants using ICEX platform for effective risk management and hedging activities. This is possible due to our contract meeting international standards and transparency in price discovery,” he said.

Price hike by Indian steel majors in offing on February opening

Monday, 31 Jan 2011

BL reported that on the backdrop of rise in iron ore and coking coal prices, Indian steel companies are set to hike prices by INR 1,000 to INR 1,500 a tonne in February.
As per report, some of them such as TATA Steel, JSW Steel and Essar Steel have hinted at a possible increase, there has been no reference to the quantum of the hike.

The report cited Mr Vikram Amin director sales & marketing as saying that “If domestic prices are higher, there is always a chance of cheap imports. At present, international prices are higher.”

Mr Jayant Acharya director sales & marketing of JSW Steel said that costs of raw materials have jumped substantially in the last few months and as a result, steel prices have had to move in tandem with input costs.(sourced:BL)

Iron Ore-Prices steady near record highs, Aussie ports reopen

Thursday Jan 27, 2011
* Buying activity slows as Lunar New Year nears
* Offers firm as Indian freight cost up
* Australia's Port Hedland reopens after cyclone (Adds trader's comment, swaps, details)
By Manolo Serapio Jr.
SINGAPORE, Jan 27 (Reuters) - Spot iron ore prices remained firm on Thursday as key indexes steadied near record highs, supported by tight Indian cargoes even as Chinese buying stalled ahead of the Lunar New Year holiday next week.
Key ports at top iron ore exporter Australia reopened after briefly shutting due to a cyclone, helping calm supply concerns.
Iron ore exports from India, already falling thanks to a ban on shipments from its southern Karnataka state, are likely to get costlier after India's railway operator raised freight cost on iron ore exports by 50 percent from Thursday as it rides on rising prices of the steelmaking ingredient.

India is the world's third-largest iron ore exporter, although its shipments have dropped for the sixth straight month in December because of the Karnataka ban.
Indian ore with 63.5 percent iron content was being quoted around $193-$195 a tonne, cost and freight to China, up from about $190 earlier in the week, although takers were scarce, traders said.
"The physical market is still strong because of tight supply but there's no buying interest," said an iron ore trader in Singapore.
"If somebody has to sell a cargo within this week they have to lower the price. Otherwise, those who have cleared their positions and are not in a hurry to sell will wait until after Chinese New Year."
China's week-long Spring Festival holiday begins on Feb. 2.

Platts' 62 percent iron ore index IODBZ00-PLT was flat at $186 a tonne, cost and freight delivered to China, on Wednesday, just a tad off the record $186.50 hit last week.
The Steel Index (TSI) 62 percent benchmark .IO62-CNI=SI ticked up 20 cents to $185.60 a tonne, just off the record $185.70 touched last Friday.
Metal Bulletin's 62 percent gauge .IO62-CNO=MB slipped 27 cents to $183.21 a tonne after hitting a record $184.43 on Monday.

PORT HEDLAND REOPENS
"Chinese market participants have their minds firmly on the impending Spring Festival celebrations," TSI said in a note, adding the market was "extremely quiet" on Wednesday "with very few Indian cargoes moving and little if anything from Australia with Port Hedland closed temporarily by a cyclone."
Port Hedland, Australia's major iron ore export terminal, reopened to all shipping traffic on Thursday. Rio Tinto , the world's No. 2 iron ore supplier, said it was resuming normal operations at its Port of Dampier iron ore terminal in northwest Australia after a passing cyclone briefly forced it to restrict port operations.

Prices of iron ore forward swaps <0#sgxios:> rose on Wednesday although levels were below the current indexes.
The Singapore Exchange-cleared February contract gained a dollar to $179.50 a tonne, March added 22 cents to $169.10 and April was up 55 cents at $161.80.
Singapore and rival bourses in the United States and Europe are competing for business in the iron ore swaps market, hoping to attract steelmakers into hedging iron ore costs after the industry moved to a quarterly contract pricing system afer the collapse of a decades-old annual benchmark scheme.
But the increasing need for a more transparent pricing mechanism has India and Singapore racing to launch the world's first iron ore futures market this year.

(Reporting by Manolo Serapio Jr, sourced Reuters)

Chinese iron ore market in holiday mood

Thursday, 27 Jan 2011

Reuters reported that offers to sell iron ore to China remained unchanged on Wednesday as steel mills stopped buying in the final week before the Lunar New Year holiday although key indexes continued to hover near record highs on Tuesday.

China iron ore market has gradually ground to a halt this week as the February 2 to 8 Lunar New Year holiday approaches, and offers of Indian ore with 63.5% iron content selling to China stood little changed at about USD 190 per tonne.

An iron ore trader in Shanghai said "Our steel mill customers have already stopped buying raw materials this week; there is no market at all right now."
Another Shanghai based trader said "There is not much time left to open letters of credit if you buy forward bookings now, and steel mills have stocked up already."

However, a few larger steel mills continue to buy the raw material from ports. Prices are cheaper than forward bookings and buyers are also concerned that costs will rise further after the holiday.(Sourced from Reuters)

Railway freight hike likely to push up iron ore export prices further

Thursday, 27 Jan 2011

Indian Railway’s move to raise freight cost on iron ore for exports by 50% from January 27th 2011 to take advantage of firm global prices, may further push up prices that are already hovering around record highs.

Iron ore prices have been marching towards USD 200 a tonne, a record last seen in February 2008 and analysts said that the Indian supply situation will be key in deciding future price direction.

A railways official said that "There has been an increase in prices in China. Exporters have been gaining, so why not the railways.”
The railways stated in a circular, dated January 25 that it would raise the freight cost on iron ore for exports to INR 1,500 (USD 32.9) per tonne from January 27th 2011.
(Sourced from Reuters)

Indian iron ore export cost to go up by USD 11 further on rail freight hike

Tuesday, 25 Jan 2011
Business Line reported that from Thursday, Indian iron ore exporters will have to shell out INR 500 extra for every tonne of traffic moved by rail.
This follows a move by the Indian Railways to increase the distance based charge, which is a charge on top of the freight rates, for iron ore exports by INR 500 a tonne.
Now, an iron ore exporter will have to pay a distance based charge of INR 1,500 per tonne.
This hike is over and above the higher amounts that the exporters were already paying. For instance, in December 2010, to move one tonne of iron ore for a distance of one kilometer, exporters were already paying 66% higher to the Railways compared with what they paid in December 2009.
The move will help the Railways beef up freight revenues in the backdrop of low level of loading of iron ore exports. In fact, despite a 41%t dip in loadings of iron ore exports in December 2010 against December 2009, the Railways had recorded a 7.87% increase in revenue earnings from iron ore export movement.
The Railways moved 2.09 million tonne of iron ore export traffic in December 2010 and earned INR 413.87 crore. (Sourced from thehindu.co.in)

Iron ore prices inching towards USD 200 mark

Tuesday, 25 Jan 2011
A fusillade of concurrent events keeps the fire in iron ore market unabated. The already outstretched supply has been scuttled by the Orissa government’s ban on 23 miners. The cargo movement is restricted from Orissa owing to road construction going on. With the supply from Australia being already tight owing to unabated torrential rains there is barely any respite for the buyers.And the final nail has been the hike ob USD 11 per tonne effective today for rail transport in India.Traders are making merry taking pot shots at every opportunity to hike prices as the on the eve of spring holidays as buying will be hamstrung. The buyers are eager to stockpile on the eve of holidays anticipating dearer purchase after words. Fe 63.5/63% has already breached USD 190 per tonne mark with a climb of 1% on the opening of week 3 and USD 200 per tonne is very visible very soon.

Grade	Change
Fe 63.5/63%	0.6%
Fe 63.5/62.5%	0.6%
Fe 63/62 %	1.2%
Fe 62 / 61%	1.3%
Fe 61 / 60 %	1.3%
Fe 60/59 %	2.1%
Fe 59 / 58 %	2.3%
Fe 58 / 57%	2.4%
Fe 57/56 %	2.6%
Fe 56/55%	1.9%
Fe 55/54 %	2.0%
Fe 54/ 53 %	2.2%
Fe 53/52 %	2.5%
Fe 52/51 %	1.4%

Change is on Jan 24th as compared to 21st Jan 2011
According to latest report the inventory level at 19 ports among China surged to 80.9 million tonnes, first time to surpass the 80 million tonnes mark since 2007 and up 1.39 million tonnes compared to last week.
The accuracy and the speed of reporting changes is well appreciated by not only Indian miners, but by global iron ore majors as well as Chinese mills as many of them have subscribed to this service to maintain another but solid listening post as far as Indian spot market is concerned. Sourced:steelguru

Indian Iron ore sold at $188.50/T, highest since Feb 2008

By Manolo Serapio Jr

SINGAPORE, Jan 19, 2011 (Reuters) - Key iron ore price indexes were on track to hit record highs on Wednesday, with spot prices closing in on $200 a tonne, aided by strong Chinese buying ahead of the Lunar New Year and persistent worries over tight supply.
Rising prices of steelmaking materials like iron ore as well as coking coal, after floods ravaged top producer Australia, drove Shanghai steel rebar futures to a record high for a third time in less than a week.
High-grade Indian ore was sold in the spot market this week at $188.50 a tonne, including freight, a level not seen since spot prices hit a record around $200 in February 2008.
Indian ore with 63.5 percent iron content was being quoted at $192 a tonne on Wednesday, said an Indian trader in Orissa.
"The way buyers are buying, the price will touch $200 although exporters in India are becoming cautious on how long the prices can be sustained," he said.
With global steel demand shaky, iron ore spot prices which have rallied since the year started, could be prone to a correction soon with some buyers from No. 1 importer China turning cautious as prices approach record highs, traders said.
"There's underlying fear that iron ore prices are going up a bit too fast," said a physical iron ore and steel trader in Singapore.
"I don't see end-users jumping to buy steel so I don't know how these prices can be sustained," he said, adding traders are dominating iron ore purchases instead of steelmakers, suggesting the rally is driven by speculative activity instead of real demand.
The outlook for the global steel sector is stable with the worst behind the industry after the economic downturn, although recovery is still relatively slow and not expected to accelerate, Standard & Poor's lead analyst Andrey Nikolaev said on Tuesday.
The most active rebar futures in the Shanghai Futures Exchange rose to a contract peak of 4,941 yuan per tonne on Wednesday, as raw material prices climbed. It closed at 4,931 yuan, up 0.4 percent.

Iron Ore-Spot at 9-mth top on tight supply; Rio output at record

Tue Jan 18, 2011 6:28am GMT, By Manolo Serapio Jr

SINGAPORE, Jan 18 (Reuters) - Spot iron ore prices touched near nine-month highs and offers remained strong on Tuesday, supported by firm Chinese buying and supply concerns in key producers Brazil and India.
There is market talk that India may lift export duty on iron ore to 20 percent from 5-10 percent currently, traders said, further tightening supply from the world's third-largest exporter where a key state Karnataka has already banned shipments since July.
India last raised the export tax on iron ore lumps in April 2010 to 15 percent from 10 percent, after slapping a 5 percent export duty on iron ore fines in December 2009.
Limited supplies from No. 2 exporter Brazil due to massive rains, Chinese stockpiling ahead of the Lunar New Year in early February and concerns over Indian exports could lift spot iron ore prices to $200 a tonne, a level last seen in 2008, traders said.
"We think it's going to stay strong and perhaps even touch $200 for 63.5/63 (grade) after Chinese New Year," said an iron ore trader in Shanghai.
"We are quite optimistic about the market at the moment," she said, adding she heard a deal was done for 63.5/63 grade at as high as $189 a tonne.
Offers for Indian ore with 63.5 percent iron content climbed to $186-$188 a tonne, including freight, on Tuesday, from $185-$187 the previous day, according to Chinese consultancy Mysteel.
The three major iron ore indexes, based on Chinese spot prices, on Monday rose to or stayed at their highest since late April 2010.
The Steel Index 62 percent benchmark .IO62-CNI=SI jumped 1.4 percent to $180.80 a tonne, and Metal Bulletin's 62 percent gauge .IO62-CNO=MB rose 1.2 percent to $176.75.
The Platts 62 percent iron ore index IODBZ00-PLT was steady at $182.50.
RECORD RIO OUTPUT
The rally may be far from losing steam, as prices for forward swaps <0#sgxios:> surged on Monday . The Singapore Exchange-cleared February contract jumped 4 percent to $181.37 a tonne, and March rose 3.4 percent to $177.75.
Strong iron ore prices are encouraging global miners to boost output. Rio Tinto , the world's second-largest producer, said iron ore output rose 6 percent to a record level in the fourth quarter.
For a table on Rio's quarterly commodity output, click:
Barring any major cyclones to hit Australia's Pilbara iron ore belt, Rio's iron ore production is likely to remain strong, James Wilson, analyst at Royal Bank of Scotland.
"The cyclones are an annual event. I don't think Rio had any problems last year and they try as much as possible to limit any loss of production," Wilson added.
"At the moment there's been nothing seriously affecting their iron ore output, but it remains to be seen what happens this season."
Market players are also eyeing a potential Indian court ruling on the Karnataka ban later this month which could help determine whether another Indian state would go ahead with its own ban on iron ore exports.
Orissa, the top iron ore producer in India, is looking at halting iron ore exports to increase availability of the raw material for local steelmakers.
"Whether Orissa will go ahead with the ban very much depends on what happens in Karnataka. If Karnataka removes the ban soon then Orissa will have no argument to push the ban," said the Shanghai-based trader.
Editing by Himani Sarkar source Reuters

Monday, Janurary17, 2011 Market Monitor - Iron Ore - WEEK 2 - market up

Monday, 17 Jan 2011

Iron ore spot market is continuing its upward momentum with approaching spring festival holidays and concerns on supply side.
Reports are filtering in for transactions at USD 184 CFR levels on limited high grade parcels from India as well as concerns of a tropical cyclone threatening to interrupt production and shipments in Australia.
As the higher grade cargos are very few, talks of up to USD 190 per tonne CFR are starting to be heard.
Iron ore fines, FOB India
Grade Change
Fe 63.5/63%------------ 2%
Fe 63.5/62.5%------------2%
Fe 63/62% ------------ 2%
Fe 62/61%------------ 2%
Fe 61/60%------------ 2%
Fe 60/59 % ------------2%
Fe 59/58 % ------------2%
Fe 58/57% ------------3%
Fe 57/56 % ------------3%
Fe 56/55%------------ 3%
Fe 55/54 % ------------3%
Fe 54/ 53 %------------ 4%
Fe 53/52 % ------------4%
Fe 52/51 % ------------5%

Change is on Jan 14th as compared to 7th Jan 2011

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.

Tianjin imported iron ore quotations keep firm

It is reported that imported iron ore quotations in Tianjin market kept firm with transactions turning better.

Currently, 63.5% Indian fines at Tianjin port is settled at CNY 1290 per tonne to CNY 1310 per tonne, PB fines is quoted at CNY 1240 per tonne to CNY 1250 per tonne, PB lumps is fixed at CNY 1350 per tonne to CNY 1370 per tonne, 61% Indian fines stands at CNY 1160 per tonne to CNY 1180 per tonne, 58% Indian fines is priced at CNY 1000 per tonne to CNY 1020 per tonne, 64.5% Brazilian coarse fines is posted at CNY 1320 per tonne to CNY 1340 per tonne.

Given limited fluctuating scope in steel market, enhanced buying interests of steel mills and tight iron ore supply, Tianjin imported iron ore market may go up amid steadiness with transaction upturn.

Sourced www.Mysteel.net Sunday, 09 Jan 2011

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