Iron ore exports likely to touch 5-year low

Despite the rebound in demand from main customer China, the Indian iron ore exports for the current fiscal may touch a five-year low, due to the shortage in availability of ore for exports.

Iron ore exports have slowed down for the past few months due to the factors such as ban on exports from Karnataka, the extended monsoon impacting mining activity in some regions and also due to the crackdown on illegal mining in States such as Orissa.

“We expect that exports for the current fiscal may not go beyond 90 million tonnes,” said Mr R.K. Sharma, Secretary General, FIMI, the apex industry association. Iron ore exports had touched an all time high of 117 million tonnes in 2009-10 on rising demand from China, from around 78 million tonnes in 2004-05.

In the current fiscal, exports for the April-October period are down almost 13 per cent to 46.4 million tonnes as against 53.2 million tonnes in the corresponding previous year. For the month of October, the exports were down 30 per cent at 6.4 million tonnes as against 9.2 million in October 2009.

However, Mr Sharma said that there is a rebound in demand for iron ore as China's imports have picked up again due to the anticipated lower domestic production in that country. This pick up in demand has resulted in price rise. The prices of iron ore with 63.5 per cent iron content has shot up to $170 per tonne for delivery in Chinese ports, up from around $140 about two months ago

“The demand is good and so are the prices. However, we are unable to take that advantage as we don't have sufficient ore,” Mr Sharma said. The ban on iron ore exports enforced by the Karnataka, which accounts for a third of India's exports, is bound to have an impact on the prices, Mr Sharma added.