Chinese to bargain for renewing suspended contracts
Source: Directorate of Mines and Geology, Goa.
Chinese mills are expected to bargain hard for pricing iron ore imports from India, which is re-entering the Chinese-dominated global market by renewing yet to be completed previous contracts and after an absence of four years.
Trade sources said the Chinese mills would be the first to renew contracts, but would press for discounts, especially highlighting that Indian iron ore deliveries have not kept to schedules in the past.
The market is oversupplied while steel mills are under pressure to manage bottom lines amidst weak global economy and steel demand.
The Chinese would also seek a share of the Indian steel market, where the world’s largest infrastructure projects are being implemented. But the sources pointed out the weaker points in Chinese steel exports, often underpricing and shipping substandard products as well as facing dumping allegations.
Nevertheless, Indian iron ore quality is rated second best to the Australian ore and better than Brazil’s. Lower shipping costs and shorter cargo voyage from India to China is another plus point in ore deliveries, said the sources at the Singapore Iron Ore Forum held May 19, 2016.
India is expected to commence shipment of iron ore from October this year, but a good number of its mines are flooded by rains while others will be re-started gradually, based on confirmed shipment orders.
Mining officials conceded iron ore exports would depend on the volume in renewed contracts, mostly with the Chinese, and some fresh deals. “It is difficult to project export volume until contracts, renewed and or new, are signed,” said an Indian mining source.
But India has enough resource to supply the Chinese with high grade iron ore, which is being priced at US$51 per tonne CIF China.
India has 31.323 billion tonnes of iron ore as April 2013, up from 22.108 billion tonnes in 2000. It added 9.215 billion tonnes through mining and exploration process during the 13-year period when only 2.041 billion tonnes were mined. fii-news.com
Tags/Keywords: Exports, Indian Iron Ore, Chinese mills, renewing contracts
