Indian iron ore exports to China have turned sluggish as manufacturing slows down in that country due to the weakening demand from the crisis-hit Europe. This, in turn, has affected the spot iron ore prices that have declined by almost a fourth in the past one month.
Exporters said that the Chinese steel mills have sufficient inventory and that stocks have piled up at major ports, resulting in sluggish iron ore imports from India. Exports could be down by 20% to 25%.
Mr Ranjan Chibba VP of Red Horse Resources Limited said that exports are down considerably. He attributed the inventory pile up at Chinese steel mills to the slowing sales to the crisis hit Europe.
However, Mr Chibba also attributed the decline in prices to the impending quarterly pricing mechanism that large exporters such as Vale and BHP Billiton plan to adopt.
Mr RK Sharma secretary general of the Federation of Indian Mineral Industries said that Chinese mills have stockpiled iron ore that would last for about two months. The Chinese have produced about 25% to 30% more steel in the past quarter and unless that is consumed or sold, the demand for Indian ore is unlikely to pick up.
Mr Sharma said that reduced demand from China, the main importer of the Indian iron ore has impacted the spot prices that have fallen from about USD 185 per tonne to around USD 140 per tonne in the past one month.
Mr Glen Kalavampara secretary of Goa Mineral Ore Exporters' Association said that exports were slowing as mining activity comes to a halt due to the onset of monsoons. It is mere speculation by media. However, till date there has been no official communication from China about any such ban.
Mr Kalavampara said that the talk of a ban probably meant that the Chinese were talking about restricting the number of importers. Today the scene in Goa is that anybody can export ore. But we have to distinguish between the long term players who have long-term contracts and the short term players who enter the market to take advantage of the Chinese boom. If Chinese want to restrict and regulate such people, we welcome that.