India’s iron ore exports are likely to hit a new low this year.
Forecasts are for 40 million tonnes in the fiscal year 2012 – 2013 according to India’s minerals industry federation. 2011 was already a terrible year for Indian exports with preliminary figures showing roughly 60 million tonnes were exported, down from 100 million tonnes in 2010 – 11.
The country produces some 200 million tonnes or iron ore per annum, but much of it is low grade, which have led to trade spats with China, where almost all of the export ore goes.
The Business Standard reports apart from the mining ban in Karnataka (responsible for a quarter of domestic output) ordered by the Indian Supreme Court in July after a series of illegal mining and fraud scandals involving politicians, new duties are to blame for the expected drop:
“The decline in exports is mainly due to rise in export duty to 30 per cent and railway freight, which is highly discriminatory for exports compared to domestic freight rates. Before 2003, nobody bought low-grade ore from India. In the future, too, apart from China, nobody will buy low-grade ore,” said Basant Poddar, chairman, Federation of Indian Mineral Industries, South.
The spot price of 62% iron ore imported into the port city Tianjin in northern China on Friday was pegged at $142/tonne, recovering from October last year when the market experienced a mini-crash. Spot declined from a record high of $180 to a low of $116/tonne over the month, before clawing back some of the losses.
Benchmark Tianjin 62% iron ore averaged a record $168 during 2011.
MINING.com argued in January that iron ore is far from being a relic of the industrial revolution and that it still plays a crucial role in the world economy and the commodities markets.
Read more on the dynamics of the global iron ore trade and why India may still prove to be a central driving force.