Iron ore prices into China stable as decreases appear to pause

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Mumbai (Platts)--3Nov2008

The recent decline in prices of imported iron ore into China appears to
have paused, a number of sources said, agreeing that the market had
stabilized.

     Iron ore spot prices for 63.5% are still at $64-67/dmt CFR north China
and 62% at $57-58/dmt CFR north China. Platts 62% iron ore fines price stayed
at $57-58/dmt CFR north China.

     There was however still very little spot trade, confirmed by the fact
that freight rates continue to decrease. Panamaxes from Brazil dropped below
$11/wmt to $10.6/wmt, and capes from Australia are down to $4.9-5/wmt.
Indian rates for handysize and panamaxes were steady at $6-8/wmt. 

     "I expect Indian rates to slide a bit as both Australian and Brazilian
rates have," an Indian trading source commented.

     In spite of high stock levels at Chinese ports, reported to be still
above the 70 million mt mark, sources said that some mills were choosing to
purchase imported spot material instead. As sellers with material in the ports
were not willing to lower prices right now for material bought at higher
prices than those seen currently, buyers have to pay cash to buy these stocks.
Whereas credit lines are available for imported material.

     Following the announcement Friday that the Indian government has changed
the export duty on all Fe grades for fines iron ore exported out of India to a
flat 200 rupees from 15%, sources said there was a small advantage to the high
Fe grades but that the change would make little difference to the lower
grades. The two hundred rupees charge is irrespective of Fe content. "At
current price levels it does not matter much," one Indian supplier said. "It
results in a $2-3/dmt difference, where as previously [when iron ore spot
prices were higher] it was more like $10/dmt," an Australian trading source
said, referring to the current low spot iron ore prices.