Asia Iron Ore-Prices surge on India tax hike, year-end buys

Source: Reuters
By Nick Trevethan

SINGAPORE, Jan 8 (Reuters) - Asian iron ore prices have risen by 20 percent in the past three weeks, bolstered by a rise in Indian export duties and steady buying by Chinese steelmakers.
The 5 percentage point rise in iron ore export taxes announced over the Christmas holiday sparked a surge in prices -- the strongest in a two-week period since early August -- and the rally continued as consumers stock up ahead of week-long Lunar New Year holidays.
"Demand is very strong. It looks like year-end buying before the Chinese new year," said Shivanand Salgaocar of V.M. Salgaocar & Brothers Pvt. Ltd, a large miner and exporter in the country's western state of Goa.
India hiked export duty on iron ore fines to 5 percent from nil and raised duty on lumps to 10 percent from 5 percent.

"Since the time the government imposed the duty, the market has gone crazy," said Raja Dhupar, Vice President at Yazdani International Pvt Ltd, an exporter based in the eastern state of Orissa.
"It's not just the traders but even the Chinese steel mills who have started buying." Traders said some Indian exporters were absorbing the duty while others were asking buyers to pay half the increase
Also bolstering prices, supplies have been constrained in the eastern state of Orissa and the southern state of Karnataka, owing to a government crackdown on illegal mining in the former and fewer transport permits.
The Steel Index's iron ore benchmark IO62-CNI=SI hit a lifetime high of $124.80 a tonne this week, up from $104.20 on Dec. 15.

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Inventories of imported iron ore at China's major ports remained steady over the final week of the year, falling just 380,000 tonnes to 66.07 million tonnes, according to industry consultancy Mysteel.
Traders have complained that the supply of imported ores from Australia and Brazil had slowed noticeably in recent weeks, though Mysteel said there were "no obvious changes" in port stockpiles from the two countries.
And based on shipping data those complaints also appeared groundless -- spot iron ore fixtures to China from Australia, Brazil and India rose by a third in December and totalled 52 vessels, according to data from AXS Marine.
India exported 10.6 million tonnes of iron ore in November, up from 8.5 million tonnes, data released by a leading trade body showed on Tuesday.
"Exports between April and November were at 64.8 million tonnes against 52.6 million tonnes a year ago", the Federation of Indian Mineral Industries said in a statement.