NEW DELHI: India’s iron ore exports dropped 12% year-on-year in March, interrupting the trend of rising sales in the previous three months, as expensive rail freight takes its toll on shipments from Karnataka and eastern India, say leading mining companies.
Iron ore exports grew 0.4% in fiscal 2008-09 to 105 million tonnes mainly due to moderate revival in demand from Chinese steel producers. Around 80% of India’s iron ore exports are billed to China, with Japan and Korea buying the rest. India produces close to 200 million tonnes iron ore every year.
Exports of iron ore, a key input in steel making, finally picked up in December 2008 after decelerating for seven consecutive months according to data compiled earlier by Minerals & Metals Trading Corporation, Goa Mineral Ore Exporters Association, and Kudremukh Iron Ore Company.
October and November 2008 were bad for domestic iron ore companies as they couldn’t find overseas orders. But when demand for steel began reviving slowly, iron ore purchases started picking up from December, 2008 onwards and are reflecting in strong January export figures, say analysts tracking the steel sector.
“The Chinese government, in the past few months, has taken various fiscal measures to safeguard domestic industries. This, coupled with the fall in global iron ore prices, has pushed up demand for Indian ore,” said Federation of Indian Mining Industry (FIMI) president Rahul Baldota. However, the main concern remains high rail freight costs, he added.
Iron ore prices in the global market fell 40% to $50 per tonne early this month from $85 per tonne in February 2009.
Currently, the freight classification of iron ore for exports is 200X, which constitutes 50-60% of FOB price of iron ore. FIMI has proposed reclassification of iron ore to class 120, which will bring down cost burden by 50%.
Source : The Economic Times