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No buyers in global mkt, ore exports to dip 40% |
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administrator |
DATE |
2008-11-04 08:59:25 |
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No buyers in global mkt, ore exports to dip 40%
Corporate Bureau, Nov 04, 2008
The iron ore industry in India is facing challenging times with no buyers for the commodity in the export market, as well as in the domestic market. India’s iron-ore exports fell last month after China, the world’s biggest steel producer and the South Asian nation’s biggest buyer of the raw material, cut purchases.
Says Rahul Baldota, president of Federation of Indian Mineral Industries, “Iron ore exports last month (October 2008) totalled 1.5 million tonnes compared with 8 million tonne a year earlier. November looks worse. There is likely to be 40% less exports this year on an annual basis,” Baldota told reporters on the sidelines of a metals and mining conference, in Mumbai on Monday.
Prices of Indian iron ore have declined to $55 per tonne from a peak of $140 due to global economic downturn. In 2007-08, India exported a total of 102 million tonne of iron ore out of its total production of 207 million tonne. “There are no buyers and hence there is pressure on prices to fall further,” Baldota adds.
Major components of iron ore price include freight and export duty, which need to be corrected. “The federation is seeking removal of export duty and reduction in the railway freight charges by 50% of what it is currently. Only then we will be able to remain competitive,” said Baldota.
The logistics cost contribute to about 75% of the total price of $ 55 per tonne currently.
Meanwhile, BMO Capital Markets in its report said, “In the very short term, the global financial crises-driven economic slowdown, easing freight rates and moderating steel smelting rates are applying downside pressure on spot iron ore prices.”
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