MUMBAI (Commodity Online): Iron ore exports from India is reported to have climbed down by around 25 per cent in the first fortnight of September following a hike in royalty by the government and the China’s mills shifting focus to Australia.
 
With this investors in iron mining firms also may have to take a very cautious approach towards the iron ore sector.

India may also lose ground to global iron ore majors BHP Billiton and Rio Tinto in China market. These companies, which generally trade on long-term contracts, began to aggressively enter the spot market ever since their long-term contracts with Chinese steel mills expired in March 2009.

Around July 2009, iron ore importers in other countries such as Korea and Japan accepted a 33 per cent price cut and, finally, the Chinese mills also settled for an interim 33-35 per cent cut in long-term contract prices. Since August, global iron ore miners have begun negotiations for fixing long-term prices for 2010. This probably is an indicator that the current year may go by without any settlement on long-term contracts being signed with China.

China’s current stockpiles of iron ore to make steel are at 75 million tonnes, just 0.6 per cent below levels last September.

Prices of low grade iron ore have also fallen from $69.4 a tonne to $65.8. It is learnt that many buyers in China are delaying their orders as they expect a further fall in prices.