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Iron ore prices to remain subdued on low Chinese demand

Iron ore prices in the international markets are likely to remain subdued in the next three months on the back of slowing Chinese demand, exporters have said.

Iron ore prices, which have fallen by close to 20 per cent in the last one month alone, however, may get some support from buying by domestic steel mills.

"Iron ore prices have already dropped by nearly 20 per cent in the last one month. Going ahead, this is likely to remain subdued on the back of slowing Chinese demand," Goa Mineral Ore Exporters Association secretary Glenn Kalavampara told PTI over phone from Panajim today.

He, however, said that fall in prices is a cyclical phenomenon for the industry and will not fall significantly from the present level of around USD 130 per tonne (for the high grade iron ore of 63-64 percent ferrous (Fe) composition)

In May, iron ore prices witnessed a significant drop, as steel output in China, which is the the world's biggest producer and consumer, declined 1.6 per cent to 60.57 million tonne in April, according the the World Steel Association data.

Similarly, iron ore imports were estimated to have dropped 8.2 per cent to 57.69 million tonne in the same month. Meanwhile, iron ore prices are likely to get some support from the domestic steel mills as they are expected to import larger quantity following supply constraints in the domestic market.

"Due to the supply constraints here, steel mills are now forced to import high-grade iron ore. Unless things improve here, the trend may continue," Kalavampara added.

Referring to the pricing issue, Federation of Indian Mineral Industries (Fimi) southern chatper chairman Basant Poddar said prices are likely to be steady in the next three months.

"Demand for the ore has dipped in the recent past due to fall in demand from China. So, I expect prices to remain steady at the current level," he said.

Poddar also said domestic steel mills are likely to continue imports in the future as import cost comes out to be lower than domestic prices.

"I think, import of iron ore by steel mills will continue as import from the Middle East or Brazil turns out to be cheaper for steel companies than domestic prices, as railway freight charges are too high here," he said.