Ore exports on shaky ground

According to sources, Australia and Brazil, the top two exporters of iron ore, are bargaining for better prices for long-term leases with Chinese steel mills.  They are demanding better prices in return for dedicated supply and increase in volume. Both countries will also increase their output in FY09 as more mining leases have been sanctioned.  This means the quantum of iron ore being traded in the spot market will come down. The worst hit will be Indian suppliers since they command the spot market.  At present, the bench mark price for a long-term lease is $60 a tonne (for high grade iron ore - containing 64 per cent ferrous content). Indian iron ore commands the highest price in the spot market at $120 a tonne (average).  The price in the spot iron ore had reached a record high of $180 a tonne last year when shipments from Australia and China were delayed on account of port congestion and inclement weather.  However, in the last one month alone, the price of Indian ore in the spot market has dipped to $90 a tonne as shipments from Australia returned to normalcy.