Mumbai, July 4 Steel majors in Asia and elsewhere are anxious about developments in India in relation to iron ore.
Steel industry stakeholders from across the world are closely watching any sign of restrictions on iron ore exports out of India.
In all likelihood, the restriction will be fiscal, and not physical, it is believed.
In the last few days, the market has been agog with rumours of an imminent 15 per cent Customs duty on iron ore shipments out of the country.
In anticipation, iron ore prices in Asia have firmed up. In addition, demand from Japan, Korea, Taiwan and Europe is beginning to become noticeable.
Spot supplies
Spot supplies are increasingly seen going to these markets, and not to China.
China has been a major buyer of Indian iron ore. During January-May 2009, Indian export shipments to China aggregated 54.25 million tonnes, up about 11 per cent from the corresponding period previous year (48.9 million tonnes).
India accounted for one-fifth of China’s total imports of 242 million tonnes in the first five months of this year.
FREIGHT RATES SOFTEN
Slowdown in shipments to China because of diversion of spot cargo to other destinations has caused ocean freight rates for bulk commodities to soften in the last few days.
From a recent peak of over $93,000 a day, average daily earning rate for Capesize carriers declined to about $71,000 a day, according to a shipping industry official.
REPRESENTATIONS
In India, there have been numerous representations for moderating the huge outflow of iron ore. The domestic steel industry has been vociferous in the demand.
If the Indian government imposes a stiff 15 per cent Customs duty, it will surely result in a substantial slowdown in iron ore exports.
Source : Business Line