Friday, March 20, 2009
Asia Iron Ore-Disinterested China subdues India price
Friday, 20 March 2009
India's iron ore prices slipped further this week as enquiries from key buyer China stayed thin, though at least one deal was done at a higher rate, exporters and the head of a trade body said on Thursday. "There is hardly any buyer. There are hardly any enquiries," said R.K. Sharma, secretary general of the Federation of Indian Mineral Industries (FIMI).
India's biggest customer for iron ore is China, which consumes just under half its total production of about 200 million tonnes.
The fall in China's iron ore buying has been attributed to a drop in demand for steel in China, which is facing an inventory build in steel due to sluggish demand from end users and to slumping exports.
But one large miner-cum-exporter based in eastern India, said a shipment booked 45 days ago for ore with iron content of 63.5 percent, was done at $70 a tonne, including freight, and sent to China earlier this week.
He did not say how much freight price it included.
Sharma from FIMI said the benchmark price for this week was at $48-$50 a tonne FOB, compared with the previous week's $50.
Indian exporters say China is also negotiating annual long term contracts for iron ore and playing a wait-and-see game, hoping to push prices lower.
Shan Shanghua, secretary general of the China Iron and Steel Association, told reporters on the sidelines of an industry conference on Thursday that China's steel industry is seeking a reduction in iron ore prices to levels seen two years ago.
Iron ore miners such as Brazil's Vale, BHP Billiton Ltd and Rio Tinto Ltd/Plc are currently negotiating with Chinese steel producers over annual iron ore contract terms.
More falls in view
A trader from a small company L.M. Trading Co based in central Indian town of Jabalpur said both buyers and sellers were waiting to see where prices would move to next.
"Sellers are hoping for some gains and buyers are expecting more falls," said the trader from L.M. Trading, which buys from miners and sells to Indian exporters.
More falls could push mines into losses, said the east India-based exporter.
"If prices fall further, production may halt," he said.
India's cost of production of iron ore is just around $8 a tonne, but logistics costs, including transportation and royalty, are over $40 a tonne in the eastern sector.
Source: Reuters
0 comments:
Post a Comment