In a move likely to severely harm Chinese importers, India has
announced it will raise duties on its iron ore exports, a sector
accounting for 23 percent of China's total imports, industry
insiders announced yesterday.
The
plan, which took effect on March 1, was first announced
by
India's Finance Minister in late February. From now on, each ton of
iron ore will carry with it an export duty of Rs 300 (US$6.78).
"The policy will have considerable impact on the country's iron
ore imports," said an anonymous source at the China Chamber of
Commerce of Metals, Minerals and Chemicals Importers and
Exporters.
The Chamber of Commerce summoned officials for a conference in
Beijing yesterday to discuss the fall-out from India's move and
possible responses, but no details of any outcome were
revealed.
India now stands as the third-largest iron ore exporter for
China, trailing Australia and Brazil, with a 23 percent market
share.?
Experts were pessimistic as to the outcome with Zhang Dongliang,
an analyst with the steel consultancy Shanghai Mysteel, forewarning
that Indian iron ore exports could well plummet while domestic iron
ore prices would soar as a result.
The move by India came as a shock to unsuspecting Chinese
importers with Ding, a trader with Hong Kong Pioneer Metals Co Ltd,
one of mainland's largest iron ore traders, feeling that Indian
iron ore would lose their price advantage over Brazilian and
Australian ores, a former weapon relied on by India.
Ding's company has temporarily suspended all iron ore sales,
since their domestic steel mills cannot take such a sudden price
hike. Further complications have resulted in iron ore imports from
Australia and Brazil also being halted after a surge in demand for
these countries' iron ore.
It is estimated that pig iron production costs would
increase by at least 80 yuan per ton if steel mills use Indian iron
ore.
However, Pioneer Metals' Ding predicted this would be a
short-term affair, adding that avenues of negotiation with
suppliers would discuss the free-on-board price to help offset the
offending price increase.
India's move comes at a bad time for Chinese steel mills and
importers who had turned to the Indian market after Australian and
Brazilian miners massively increased their iron ore prices over the
last three years.
(China Daily March 7, 2007)