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| Iron ore prices rise 10% in June on China demand |
| Dilip Kumar Jha / Mumbai Jun 11, 2009, 00:57 IST |
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Iron ore prices surged 10 per cent, touching a four-month high in June on rising demand from China even as the final decision on long term contract prices remained unresolved between Australian suppliers and Chinese buyers.
Iron ore fines of over 63 per cent iron content are being quoted at $55 a tonne in the
spot market as against $50 a tonne during the previous month. This category of ore
has seen a fair demand in the most recent past, especially from China, following the discussion on price cuts remaining inconclusive between miners and consumers.
“We cannot say that prices have gone up as minor fluctuation happen between buyers and sellers. But indications are favourable,” said S B S Chouhan, advisor of the Federation of Indian Mineral Industries (FIMI), the representative body of iron ore miners in India.
Looking at the low steel demand globally, China as the largest steel producer has insisted on a 50 per cent cut in the benchmark iron ore prices. But, this was rejected by the two largest miners — BHP Billiton and Rio Tinto. However, the miners have offered a 33 per cent price cut on a long term basis from the last year’s benchmark prices of $100 per tonne. China is also the world’s largest importer.
India as a net exporter of iron ore will benefit if Australian miners and Chinese buyers negotiate higher prices.
According to trade sources, Rio Tinto last month agreed to sell ore under annual contracts to Japanese and South Korean mills for about $61 a tonne. Freight costs for vessels carrying ore to China from Australia are about $17 a tonne.
Demand has picked up slightly , said Haresh Melwani, chief executive officer of H L Nathurmal & Co, a Goa-based iron ore miner and exporter.
China produces over 500 million tonnes of steel for which it requires over 800 million tonnes of iron ore of which India shares over 100 million tonnes.
China has been silently building up its inventory through cheap imports despite its annual exports to the USA dwindling due to the recession. It is about 20 million tonnes. China’s ore imports have risen to 55 million tonnes in May alone, a rise from 53 million tonnes.
During May, India’s shipment is estimated at 16-17 million tonnes as against 13 million tonnes in the previous month.
Low grade of iron ore has witnessed a price rise between $1-2 a tonne from Goa, confirmed Glenn Kalavampara, Secretary of Goa Mineral Ore Exporters’ Association (GMOEA). Goa deals mainly in low grade iron ore of 57-58 per cent and below of iron content.
India’s total exports registered a marginal increase at 105 million tonnes of iron ore during the last financial year from 104 million tonnes in the previous year.
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