India's Trade Body For Rollback Of Export Duty On Iron Ore.

India's mineral industries body wants the government to abandon plans to hike iron ore export duties which is hurting sales to China, the country's biggest buyer of low-grade ore.

The 200-member strong Federation of Indian Mineral Industries (FIMI) will ask for a full rollback of planned export duties on iron ore lumps and fines to pre-budget levels on Monday, Secretary-General R.K. Sharma said on Friday.

The move, effective April 1, was announced in the budget for the financial year 2012 on Monday and could make Australian and Brazilian ores more attractive to Chinese buyers.

FIMI wants to keep the duty back at pre-budget levels of 15 percent for lumps and 5 percent for fines, Sharma said.

Exporters are already battling with two freight rate hikes in the past three months on top of the export duty hikes.

Spot iron ore prices are high currently and declining steel futures combined with hefty stockpiles of imported ore at Chinese ports are allowing buyers to wait for lower prices.

India's budget raises the export duty to 20 percent from 15 percent on lumps and from 5 percent on fines respectively.

Freight rates on ores meant for export were hiked by 100 rupees per tonne to 1,600 rupees from March. 3.

Indian Railways hiked freight rates by 50 percent on Jan. 27.

"These export duties are hurting the market, exporters are making a loss of up to 700-1,000 rupees ($15-22) per tonne," said Dhruv Goel, managing partner at Steelmint in India's eastern Orissa state. He said Australian and Brazilian ores would be more attractive.

"The export duty is too high, and even railway freight is high, amounting to 2,600 rupees in the form of taxes," Goel added.

India's iron ore exports have already suffered from an export ban by a key state which helped decrease overseas sales for the seventh straight month in January.

The ban is being contested by exporters in the Supreme Court while two other states have asked the government to allow them to halt exports.

The government would prefer to avoid a blanket ban, which penalises both legal and illegal mining, and instead improve regulation.

It is in favour of making the steel-making ingredient available for domestic steel producers like Tata Steel, JSW Steel and Essar Steel, as it looks to cover demand in Asia's third-largest economy domestically.

($1=44.985 Indian rupees)

Source : in.reuters.com