A Reuters poll showed that iron ore exports from India are likely to fall by more than a quarter to their lowest level in eight years because of higher costs and slow efforts in a key state to resume shipments.
According to the median estimate in a Reuters poll of 10 iron ore miners, exporters and analysts, iron ore sales from the world''s third largest exporter are forecast to fall to 71.25 million tonnes in the current year to next March, from 95 million tonnes in the previous year. That would be the lowest export volume since 2003/04 when shipments stood at 62.57 million tonnes.
An iron ore trader with an international brokerage based in London said that "More tariffs and higher costs along with outright bans will further limit exports.”
Tight Indian supplies are expected to keep spot iron ore prices firm, along with strong demand from top steel producer China. Prices of the steelmaking ingredient rose to record highs above USD 190 a tonne in mid February.
India''s Karnataka state, which accounts for about a quarter of the country''s iron ore exports, banned shipments in July last year to curb illegal mining. In April, the Supreme Court ordered the state to resume shipments but, to date, exports have yet to resume with state officials citing technical problems.
Along with the ban, the federal government, in a bid to conserve the raw material for use by local steel producers, raised the export tax on iron ore fines to 20% from 5%. Indian Railways also hiked freight rates twice this year, making carriage costs five times more expensive than those for ore for local consumption.
Mr David Pichamuthu head of the Federation of Indian Minerals and Industry southern region said that "Production has come down and dispatches have also come down and everyone is losing, the railways, ports and the government.”
( Source: www.steelguru.com )