Global Iron Ore Prices May Dip On Additional Supply From India.

Global iron ore prices are expected to see a downward trend in the near term, with additional supply from India set to drag down prices by around 10%. This follows the lifting of the ban on the commodity's export from Karnataka.

Lack of effective demand from China, along with the crisis in Japan, will support this trend, with dim chances of an upward bias on the pricing front.

Mr Basant Poddar VP of Federation of Indian Mineral Industries said that "Additional supply from Karnataka will soften the prices of the commodity to a certain degree in the near term. It is expected to touch USD 150 a tonne in two to three months, as against the current level of USD 165."

He added that "Karnataka is an important state, with nearly 30 million tone of ore produced a year. Around 1 to 1.5 million tonnes will be produced in the coming few months."

However, he said the high railway freight charges, along with an export duty of 20% on iron ore fines, would make Indian ore unattractive in the international market.

Mr Sandeep Jain, an analyst with Karvy Comtrade, said that "Around 81 million tonnes of ore is lying at various Chinese ports. Thus, there are less chances of China building up an inventory in the future. Further, rising interest rates by the Chinese central bank will dampen overall demand. In such a scenario, volume addition will create a demand supply mismatch, cooling prices further."

Mr Jain added that "Demand environment is not supportive of any supply addition in the global market."

Mr Glenn Kalavampara secretary of Goa Mineral Ore Exporters' Association said that "However, some industry players have a different opinion on this matter. Prices may cool down if new stocks come to ports. However, it’s too early to predict the pricing trend."

He added that high railway freight charges, along with export duty regime and volume addition would not be substantial enough to influence prices in global market.

Source : steelguru.com