Iron ore export price to China has increased by around 12 per cent since end of April on the back of higher ocean freight rates.
According to industry sources, price of ore having 63 per cent iron content increased from $48 a tonne to $54 a tonne. However, the increase has been attributed to a fluctuation in freight rates rather than a demand surge. But Rahul Baldota, president, Federation of Indian Mineral Industries (FIMI) said that the increase was not across the board.
Even though iron ore imports into China had surged, most of it was from Australia. Industry sources said, China preferred to buy the Goa ore which has less iron content than the high grade ore. Iron ore imports into China in April stood at a record 57 million tonnes.
Industry representatives feel that the iron ore prices might not dip to the extent it was expected to at the beginning of the year. “We thought prices would dip 50 per cent, but that is unlikely to happen. China is expected to import around 600 million tonnes of iron ore as against 440 million tonnes last year, which would have an impact on global prices. But whether it will be able to offset the lower demand from the European countries, remains to be seen.” The iron contracts for the year have not been settled as yet.
In the domestic spot market, prices in the eastern part of the Indian market were much higher than the export prices. Baldota said, the demand was higher in the eastern side. For higher grade iron ore lumps, prices were hovering around $81 a tonne, though the same ore was being sold in the southern part of the country at much lower prices.
The iron ore scenario is somewhat similar to the trend in steel prices, where ruling domestic prices are higher than that prevailing in the rest of the world.
According to a forecast made by the World Steel Association (WSA), India would be the only major economy that would see a growth in apparent usage of steel in 2009. WSA represents approximately 180 steel producers including 18 of the world’s 20 largest steel companies.
