Rise in yuan exchange rate against the dollar may not benefit India?s iron ore exports to China in a big way as Beijing is developing its own mineral reserves.
?It is difficult to say how much yuan appreciation would help Indian iron ore exports. First of all yuan appreciation has to take place. Also, China is developing its own iron reserves besides the sluggish demand,? steel secretary Atul Chaturvedi said.
Exporters said Chinese steel mills have sufficient inventory, and stocks have piled up at all major ports resulting in sluggish iron ore imports from India. India?s exports to china could be down 20-25% this year, Federation of Indian Mineral Industries secretary general RK Sharma said.
Although yuan appreciation may help a little, landed prices of iron ore in China has fallen to $140 a tonne from $185 in past one-two months, he said.
Chaturvedi said with China developing iron ore mines there ?we should not be surprised if Chinese authorities say few months down the line they want to reduce their ore imports from India.
Also, weakening demand from crisis-hit Europe has hit manufacturing in China that has resulted in reduced demand for steel. India exported 107 million tonne of iron ore to China in 2009 accounting for 18% of Chinese imports of the mineral. About 50% of iron ore exports to China are low grade ore.
India has one of the largest iron ore reserves in the world. The reserves are estimated at around 22,000 million tonne, sufficient to meet the country?s needs for the next 150 years. Nearly two-thirds of the iron ore produced in the country is exported.