Home | Contact Us | Sitemap |  Login  / Register

News and Events

Falling rupee may offer relief to iron ore exporters

Falling rupee may offer some relief to the iron ore exporters who have been up in the arms against the recent export duty hike. The government has hiked the export duty on iron ore from 20% to 30%.

The rupee has depreciated up to 16% in the last few months. In mid-December it had even touched R54.30 a dollar. The iron ore exporters, however, say there would be little relief (from a weak rupee) as the fines prices in the international markets have already gone down hugely.

High grade (62-63%) iron ore prices have fallen from $156 per tonne in September 2011 to around $124 per tonne in December. In January, the same is priced at $130 per million tonne (mt) on fright on board basis. The rupee, meanwhile, has depreciated from $149.61 to $53.23 a dollar. This, according to R K Sharma, secretary general of Federation of Indian Mineral Industries (FIMI) has already helped exporters to maintain their margins to some extent.

“The value of exported iron ore dipped tremendously from September to October from around R7,740 per tonne to R5,251. The losses were covered during November and December due to falling rupee which crossed R53 per dollar. But now, there is no scope for it cover additional losses,” Sharma explained.

An additional 10% duty increase would mean exporters will have to pay $39 instead of $26 per tonne on the shipment of iron ore. Even for lower grade (53%) iron ore -- priced at $103 per mt – the duty will go up from $20.6 to $30.9 per million tonne.

The hike, exporters, said cannot be passed on to the consumers. “It is not possible to simply pass the export duty to clients as we follow an international market price for overseas sales. Unless the price increases in international market, exporters have to bear the export duty hike,” Praveen Kumar chairman, Maya Iron Ore, said.

Industry body Assocham, however, supported government’s move to increase the duty. It said that conservation of iron ore is in national interest. “India exported iron ore worth $4.7 billion in 2010-11 and imported finished steel worth $11 billion, thus contributing negatively to widening trade deficit and draining foreign exchange reserves.

« Back

Upcoming Events