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| Iron ore shipment cost up 26% on Chinese demand |
| Dilip Kumar Jha / Mumbai Jul 28, 2009, 00:02 IST |
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Enthused by the rise in iron ore demand from China, especially in the wake of differences over prices between Chinese steel mills and global miners, including Brazil’s Vale SA, BHP Billiton and Rio Tinto, Indian shipping companies have increased the freight rate by 26.32 per cent in the past one month.
Freight charge from Goa, which was quoted at $18-19 a tonne for small ships a month ago, is now quoted at $23-24 a tonne, while for bigger ships, it has gone up to $19-20 a tonne for any Chinese port.
Glenn Kalavampara, secretary of Goa Mineral Ore Exporters’ Association (GMOEA), attributes the freight rate hike to a substantial increase in enquiries from China, the country which is at present struggling to arrive at a final benchmark price for 2009-10.
China’s buying contracts expired on June 30. Talks for the fresh deal with global iron ore mining majors snagged on Chinese steel mills’ insistence on a price cut higher than 33 per cent reduction agreed by Japanese and Korean mills.
Chinese steel mills have been insisting on a 45 per cent price cut from the last year’s benchmark following two years of price hikes totalling more than 100 per cent.
The delay in negotiation on iron ore supply prices between Chinese steel mills and global iron ore majors was likely to benefit Indian exporters, said R K Sharma, secretary general of the Federation of Indian Mineral Industries (FIMI).
Prices of Indian iron ore (with 63 per cent iron content) have risen by 35 per cent for Chinese ports, from $65 a tonne to over $90 in the past two months. Experts believe if the long-term agreement between global suppliers and Chinese importers is not achieved, then iron ore price will rise further and hit the $100-mark.
The free-on-board (FoB) prices of iron ore have surged by $10 a tonne at Indian ports.
The spot price of Indian ore has hit 700-710 yuan a tonne, almost 50 per cent up from April.
Since Indian exporters avoided long-term deals with overseas importers, any hike in spot prices would result in an additional income for Indian suppliers, Sharma added.
Indian exporters shipped 92 million tonnes of ore last financial year, of which over 90 per cent was sent to China. In May 2009, total exports increased to 10.05 million tonnes from 9 million tonnes in the corresponding month last year.
Chinese steel makers consume up to 60 per cent of global iron ore production, nearly all imported. In 2008, the world’s largest steel producer imported 444 million tonnes, more than half of the world’s total production of the raw material.
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