Iron ore exports to China lose steam

India, which was the second largest supplier of iron ore to China for the last two years, has slipped to the third position during the first nine months this year. Brazil has overtaken India as the second largest supplier of iron ore to China, while Australia retained its top position.

During the period, China's iron ore imports rose 15 per cent to 285 million tonnes. The country imports iron ore from 34 countries of which Australia, India and Brazil constitute 85 per cent.

According to China Metallurgical Enterprises Management Association data, India exported 60.93 million tonnes of iron ore during January and September 2007, accounting for 21.5 per cent of China's total imports.

While Australia exported 109 million tonnes, Brazil supplied 72.22 million tonnes. During the corresponding period last year, India had exported more than 65 million tonnes.

This year, India has not been able to maintain the same position despite commanding the highest spot price ($175 a tonne for high grade iron ore) in the international market. Exports have not risen in tandem due to poor transport infrastructure and non availability of cargo vessels.

"Indian exporters have not been successful in taking advantage of the demand from China because of infrastructure bottlenecks. Consequently, India is lagging behind Brazil in exports," S B Chauhan, advisor, Federation of Indian Mineral Industries (Fimi), said.

China estimates iron ore imports to touch 403 million tonnes this year, as against last year's 325 million tonnes. Last year, India had exported 91 million tonnes of iron ore and China accounted for 84 per cent of it.

"India had over taken Brazil as the second largest supplier of iron ore to China in 2005. Brazil has increased its overall production capacity in the last two years," Chauhan said.

As India is geographically closer to China when compared with Brazil, freight costs should be significantly lesser. Besides, ocean freight costs between China and Brazil have risen. Brazil, too, is suffering from port infrastructure problems.

"However, India's port infrastructure and transportation logistics are poor when compared with Brazil and Australia. Unless these are improved, Indian iron exports cannot cross 100 million tonnes in a year," he added.

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ROAD BLOCK

India exported 60.93 million tonnes of iron ore during January and September 2007, accounting for 21.5 per cent of China's total imports

Brazil has overtaken India as the second largest supplier of iron ore to China, while Australia retained its top position

While Australia exported 109 million tonnes, Brazil supplied 72.22 million tonnes

China's iron ore imports rose 15 per cent to 285 million tonnes in the first nine months of 2007

The country imports iron ore from 34 countries of which Australia, India and Brazil constitute 85 per cent

China estimates iron ore imports to touch 403 million tonnes this year, as against last year's 325 million tonnes