Steady demand from China keeps iron ore prices flat

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Mumbai: Iron ore was flat from last week on steady overseas demand, although exporters hope China’s inconclusive talks on benchmark prices will lift prices.

“Many inquiries are there, but due to congestion in ports, the demand is not being met,” said an executive in a large trading company based in east India, where port workers went on strike last week.

The executive said a strike at Haldia port in West Bengal state that began on June 27 got and was called off on Sunday, but congestion at the ports had still not eased.

“The waiting time for ships in neighbouring Paradip port was up to 20 days,” the executive in a large trading house based in Bhubaneswar, near the port, said.

On Thursday, quotes from exporters for the benchmark 63.5 grade of iron ore ranged between $60-$64 a tonne, compared with last week's $62-$65.

Deutsche Bank's one month iron ore swaps were at $81.75, higher than last week's $74.

Exporters said China's talks on benchmark prices with Australia remained inconclusive, gave an advantageous position to India as Chinese firms turn to the spot market, where the country sells its iron ore.

There had been a report in a Chinese newspaper that a settlement had been reached, although this was not confirmed, while China detained four Rio excutives based in China, although it was not clear this was linked to the negotiations.

“If the stalemate continues, China will keep buying more from India,” said Siddharth Rungta, vice-president of the Federation of Indian Mineral Industries (FIMI), who also owns mines.

If China's settlement is reached, prices might correct by a few dollars.

China is the country’s biggest iron ore customer, buying a major portion of India's 100 million tonne annual exports for its steel industry, the world's biggest.

In the Budget 2009-10, presented on Monday, there was no mention of raise in the export tax on iron ore as expected, but traders and an analyst said the possibility of an increase still exists. On Wednesday, steel minister Virbhadra Singh said the government was not keen to encourage iron ore exports.

An analyst said any rise in inflation or iron ore prices may drive the government to raise the export duty to cool down prices of iron ore for the domestic steel industry.