The exports of Indian iron ore shone during November 2008 owing to rising demand from China that is favoring India over Brazil and Australia due to low cost offered by the former.
Iron ore exports from India surged in November 2008 over the previous month with increased demand from China, said the Federation of Indian Mineral Industries, as reported by Indiainfoline.
The iron ore exports rose from 4.13 Million Tons in October 2008 to 8.74 Million Tons in November 2008, while the exports during November 2007 had stood at 10.16 Million Tons owing to boom in the Chinese steel and construction sector. China is the world’s largest steel producer and it imports a major chunk of iron ore from India.
After dipping to a low of 4.13 Million Tons in October 2008, the Indian iron ore exports picked up momentum, thanks to the rising demand from China. Chinese steel producers are finding iron ore in the Indian spot market cheaper and beneficial than signing long-term agreements with the Brazilian and Australian mining firms.
The Chinese steel producers signed contracts of importing ore with the Brazilian and Australian mining firms early this year, but the ore prices have come down significantly in the spot market; as a result, steel producers are deliberately delaying purchases from those firms and mainly importing low-cost ore from India.
Now the Chinese steel producers are running short of raw material inventories build during the Olympics and hence, the country is starting to buy iron ore. Staring of economic slowdown after Beijing Olympics and the global financial crisis took toll on the Chinese industrial output that led to decline in iron ore exports from India.
Besides, there has been some improvement in the availability of railway rakes for movement to the ports in last few weeks, and the shipments from all major ports, including Murmugao, Chennai and Paradip, have risen, said officials of the Indian mining companies.
According to a Research analyst at RNCOS, “As China deferred contracted supplies of iron ore from Brazil and Australia to buy from the Indian spot market at lower cost, the Indian iron ore exports rose during November 2008. Resultantly, the government has completely removed export duty for ore (iron) fines and cut the rates. This is in favor of exporters and the positive impact of tax reduction will be seen in near future.”
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