Spot rates for Indian iron ore rise for second week in China

The price of Indian iron ore exported to China went up for a second week in a row as speculation mounted that the east Indian state of Orissa would soon restrict exports of the steelmaking material. Another major exporter, the south Indian state of Karnataka, banned exports of the ore last year July.

Orissa is not only India's largest iron-ore producer but is also its third-biggest exporter. It has moved recently to ban exports as it has signed a large number of MoUs with private and state mining companies and wishes to preserve supplies for these ventures.

State government officials, however, are yet to set a deadline for banning exports. Local market speculation would have it that any such ban would be premature as the state is a large producer of high-grade fines, which cannot be absorbed in large numbers domestically as factories designed to absorb such grade of ore are yet to come up in large enough numbers. At the earliest they will go on stream only over the next couple of years. Any hasty move to ban exports, therefore, would result in loss of substantial revenue for the state, as also huge stockpiling of material.

In global markets, however, talk of export restrictions has caused concerns and spot rates for fines may continue with the current uptrend over the next week, market observers said.

Indian iron ore shipped to China rose 1.7 per cent in the week to today to $180 a metric ton, according to Shanghai Steelhome Information. That extended a 0.6 per cent increase in the prior week.

Orissa exported about 20 million tons of iron ore last year.

China imported 5.3 million tons of the ore from India in November alone, which was 9.3 per cent of all their imports, according to customs figures. These imports allowed China to produce 44 per cent of the world's crude steel for that month, according to the World Steel Association.