China buyers seek discount to lift ore

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

30 Sep 2008

Chinese buyers of Indian iron ore are defaulting on import contracts and refusing to lift the ore unless the seller offers a discount on contracted prices, President of the Federation of Indian Mineral Industries (FIMI) and Managing Director of MSPL Ltd Rahul Baldota said today.  “Our exports are deep in the red, as there is no demand from China,” he said Chinese appetite for Indian ore has fallen despite rival Brazilian miner Vale’s demand for higher prices for the ore it exports to China. Nearly 75 per cent of India’s annual iron ore exports of about 100 million tonnes go to China. Shipments usually shoot up after the monsoon ends in September.
However, exports in the first half of September have dropped to 1.99 million tonnes from 2.7 million tonnes in the same period last year. Shipments in August were also lower at 4.57 million tonnes against 5.39 million tonnes a year earlier, according to FIMI.
Baldota said the Chinese are backing out of old contracts and demanding a price reduction to lift shipments. He said importers were willing to buy high-grade 63.5 percent iron ore at about $75 (Rs 3,375) a tonne, about 45 per cent lower than the rate of around $140 (Rs 6,300) that prevailed in June.
Export demand for even low-grade iron ore of 57 to 60 per cent iron content, shipped mainly from Goa, is also flat.
“Hardly any exporter is doing anything even though our shipments usually start picking up around this time,” said Goa Mineral Ore Exporters Association (GMOEA) Secretary Glenn Kalvampara.
“If the situation continues like this, we will export only around 50 million tonnes in the year ending March,” Baldota said.
India’s iron ore industry has demanded removal of the 15 per cent ore export duty – imposed in June to discourage exports and ensure raw material for domestic steel firms – to help revive demand from China.
The China Securities Journal reported on Friday that Chinese steel mills would not import iron ore from Brazil in the near term, after Vale asked for a price hike.

Source: Herald