Iron ore prices may drop on reluctant China

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New Delhi, Jan 17: Export prices for iron ore could drop to $110 per tonne by March from current levels of $120-$125 due to a sharp fall in enquiries from main buyer China, the head of an Indian trade body said on Thursday. Iron ore prices nearly doubled in the nine months from March 2007 due to growing international demand, but major consumer China is now seen easing off purchases. “About a month ago, there were always seven to eight people in the market competing for one shipment. Now it has hardly come down to two to three,” said Rahul Baldota, president of the Federation of Indian Mineral Industries. He said spot prices of iron ore from India had already dropped to $120 to $125 per tonne from $135 about 10 days ago, adding: “The Chinese are not willing to pay such high prices.” Port congestion in rival exporting nations like Australia had eased, enabling larger volumes and lower prices, he said. Demand for iron ore from India and other nations had already weakened after Beijing tightened credit, and high costs forced some small mills to shut.

As a result, the landed price of medium-grade Indian iron ore has come down to about $190 a tonne from above $200 in recent weeks.