Iron ore spot prices in Orissa, a leading producer of the ore in the country, may fall by at least 6 percent within next two weeks because of the new export duty that comes into effect from April 1 and slowdown in global demand after natural disaster in Japan, said industry sources.
Currently better quality iron ore is priced at $160 per tonne at Paradeep port. Traders and exporters feel the prices may come down by $10 to $150 per tonne by the end of this month.
“Local miners have not reduced iron ore prices yet, but they will have to do it eventually,” said Amit Arya, a city-based iron ore trader.
Spot iron ore prices at mines are hovering around Rs 2, 500 to Rs 2, 800 per tonne depending upon mine location and quality of the ore. Arya said the miners may cut down the prices by Rs 500 per tonne in the next two or three weeks.
The Union Government increased export duty on iron ore fines four-fold to 20 percent in the budget proposal for 2011-12 in a bid to discourage exports and conserve the material for use by the steel makers within the country.
After the announcement, iron ore shipment contracts have taken a hit, said the exporters.
“Definitely the shipments would be affected (because of the duty hike). In fact, it has already started affecting forward contract agreements,” said an official working in a large steel plant with captive mines.
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Iron ore prices in China have come down in recent days following fear of slow down in demand because of the devastating natural calamity in Japan, world’s second largest steel maker after China.
Though most of India’s iron ore are shipped to China, traders expect the demand slump in Japan could affect exports from India.
“It is true that our exports are mostly to China, but the commodity is then re-exported to Japan and to other countries. And if there is slump in demand from Japan, then shipment to China will drop too,” said Arya, who is also a partner with iron ore exporter Global India.
India exports nearly half of its total iron ore production, and 80 per cent of the shipments go to China. China’s import of Ind