Market quotations of Indian fine ore at the Chinese ports have again started the year with an increase, with quotations of 63.5 percent Indian fine ore up to $125-128/mt CFR, excceding the highest level last year. Meanwhile, it is reported that total iron ore inventory at China's ports amounts to 65 million mt or so, marking a decline compared with previous levels.
At the end of 2009, the Indian government increased its export duties on iron ore lumps from five percent to 10 percent and upped the export duties on iron ore fines from zero to five percent.
According to some market analysts in China, the increased export duties on Indian ore and the higher Indian ore prices both influence each other. The demand from the Chinese market has caused the Indian ore prices to rise higher, with the Indian government increasing its export duties on iron ore in consideration of the boom in sales; however, the new duty has also had the effect of again stimulating the prices of Indian ore.
Some market analysts have commented that the price increases for Indian ore lack sustainability. The iron ore price increases have already exceeded the growth recorded by steel prices. The situation is the same with prices of coke, coal and other raw materials. Currently, some Tangshan and Shandong-based mills have already planned overhauling works so as to reduce production and to avoid the market risks caused by the strong hikes in raw material prices.