| The Indian government has raised the export duty on iron ore lumps to 15 percent from 10 percent previously, Finance Minister Pranab Mukherjee said in parliament on Thursday, a move that could shrink China's procurement from India.
The move is designed to make more of the steel-making raw material available for domestic steel makers, currently facing shortage in ore supplies and firm prices as a result.
"Keeping in view the trend in the quantum of exports and domestic and international prices, the duty on iron ore lumps is being increased further to 15 percent," Mukherjee said, according to a copy of his speech made in the lower house of parliament.
India last raised the duty on iron ore lumps in December to 10 percent from 5 percent, and on fines it imposed a 5 percent duty.
A prominent Chinese buyer of iron ore from India said the hike in the tax would hurt India's exports in the near term though it was too soon to say if the full year's shipments would take a hit.
"This would affect the market of low grade lumps that is exported from Goa (in western India)," said Satyajit Singh, director of marketing of Sinosteel based in India.
Sinosteel is Chinese state-run trader and is one of the biggest buyers of Indian iron ore.
CHINESE DEMAND FALLS
Singh said the demand for iron ore from China was low at the moment so prices may not react to the Indian announcement.
China's upcoming closure for May Day holidays and a general slowdown in purchasing by steel mills amid worries about tightening in the property sector in China has lessened demand in the last 10 days.
An iron ore miner said he welcomed no changes in tax on iron ore fines.
"This won't have any adverse impact (on exports) as it is not on fines that comprises majority of our exports," said Gaurav Atha, managing partner at K.N. Ram and Co, the miner in eastern India.
China, the world's largest steelmaker, banks on India as its number three supplier after Australia and Brazil.
Latest data from China's customs shows in March, India's supplies were at 13.46 million tonnes, up 4.25 percent on year. In January to March, India's supplies to China were at 33.26 million tonnes, down 2.4 percent on year.
The data from China also shows that so far this year, India was ahead of Brazil, at number two position, in its iron ore supply.
India exports about half of its annual iron ore production of about 222 million tonnes mostly to China. |
