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Iron Ore Prices may soften in 3-6 weeks

Global iron ore prices which had recently shot up to $160 per tonne are expected to soften over the next 3-6- weeks, industry sources said.

"China has been placing orders for winter supplies to feed its northern steel mills. This helped iron ore prices to spike from the $ 135-140 mark and touch the $160-165 level," an official with one of the large Karnataka mines told ET. The official, who did not wish to be quoted, said prices could correct by mid-November and re-test the $120-130 levels again.

Mr Tamajit Pain, analyst with mJunction, a e-commerce company specializing in steel, coal and procurement services, says global offtake has been slow, impacting prices." Since January-February this year, China’s steel industry has not grown the way it has in the rest of the world. This has impacted steel prices in the neighbouring country and resulted in the easing of imports of the steel-making raw material from India, thereby easing iron ore prices," he adds. China, it may be recalled, accounts for nearly 90% of India’s iron-ore exports.

Mr Pain and his colleague Mr Rakesh Dubey say the recent action of the Brazilian and Australian iron ore suppliers to base their prices on indices (like Platts Index and Metal Bulletin) and not subject them to quarterly version would also impact spot Indian iron ore prices as the Indian prices will move in tandem with global prices. Even as there are worries about the softening of global iron ore prices, there are certain other immediate concerns including the recent appreciation of the rupee against the dollar which nag Indian exporters. Besides the appreciation, a prolonged spell of wet weather in south India has also spelt trouble.

"Goa has been receiving rains disrupting loading of ships. If the wet weather continues , it would impact shipment and create problems of its own for exporters," a source at the Goad Mineral Ore Exporters Association told ET.

Source:The Economics Times