Iron ore declines 4% on global cues

Iron ore price declined 4% in early Tuesday trade on the Multi Commodity Exchange following the global trend.

The price of the steelmaking raw material fell to Rs 4,915 a tonne for near month delivery amid concerns of lower demand from Indian steel mills and government’s restrictions on exports. While mining restrictions in both Karnataka and Goa squeezed availability of iron ore, independent steel producers are working to use alternate raw materials including value added products like sponge iron and scrap for producing steel.

Meanwhile, benchmark iron ore with 62% iron content dropped 0.3% to $119.60 a tonne in China, according to Steel Index as buyers from the world’s largest consumer - China - exercise caution after filling up short-term needs, although a gradual pickup in steel demand should keep losses in check.

Since rebounding from three-year lows of below $87 touched in early September, iron ore prices have been trapped in narrow ranges of between $110 and just below $120 as China's economic slowdown curbs its appetite for raw materials. Still, miners continue to offload cargoes on the spot market, hoping for a sustained increase in China's steel production.

China's average daily crude steel output hit nearly 2 million tonnes over the October 11-20 period, rising 4.3% from the previous 10 days, industry data showed.

India’s leading private sector iron ore miner Sesa Goa, however, feels that the activities on its closed mine in Goa would begin towards the end of December.

Acting harsh on the recommendations by the M B Shah Commission appointed by the Supreme Court, the government of Goa has ordered shut down of all mines temporarily paving the way to collect taxes properly.