India’s iron ore exports in March will slump as China, the world’s largest consumer of the steel-making raw material, reduces purchasing after stockpiles rose.
“Demand has dried up since the last week of February,” Rahul Baldota, president of the Federation of Indian Mineral Industries, said in a telephone interview today. Indian iron ore prices have fallen by $15 from $85 a tonne in February, he said.
The number of ships waiting to unload imported iron ore at ports in China surged 50 per cent in February from a month earlier due to lower demand, Scotia Capital Inc. wrote in a report this week. Indian exports in December and January had increased on higher Chinese purchase, the federation said.
“We are going back to the September-October levels,” Baldota said. “In February we may clock slightly higher sales but it’s a definite fall in March.” In October, Indian iron ore exports slumped to 1.5 million tons from 8 million tonnes a year earlier, according to the federation.
Benchmark steel prices in China have fallen 12 per cent since February 4 after mills increased output on expectation of demand coming from the government’s 4 trillion yuan ($585 billion) stimulus package. More than 60 per cent of Chinese mills are losing money now, the China Iron and Steel Association said February 23.
Prices for iron ore had the biggest weekly drop since October, according to UK-based Metal Bulletin Plc. Prices fell 8.5 per cent to $75 a tonne in the last week of February, according to Metal Bulletin.
“Steel production had ramped up too quickly in response to higher prices, which were driven by expectations of an economic recovery,” Na Liu, a Toronto-based analyst at Scotia Capital Inc., a unit of Bank of Nova Scotia, wrote in a report. “As a result, inventory rose sharply. The pullback of China’s steel market obviously has negative implications for iron ore.”