China's iron ore traders reject India's new export duty

China's iron ore traders reject India's new export duty

China's iron ore importers have rejected India's new iron ore concentrate export duty of Rs.300 ($6.74) per ton, an anonymous Beijing source told Interfax on March 7.

The China Chamber of Commerce of Metals, Minerals, Chemicals Importers and Exporters (CCCMC) convened a meeting yesterday of more than 100 iron ore traders in Beijing, they discussed the implications of the Indian government's iron ore export duty that came into effect on March 1.

An iron ore trader from Shandong province who participated in the meeting but wished to remain anonymous, said that the attending companies all agreed to reject the price hike caused by the new export duty, and will insist that contracts signed before March 1 be honored at their original price.

"Moreover, we have decided to blacklist Indian iron ore suppliers who are taking advantage of this policy to increase iron ore prices by an exorbitant amount. Blacklisted companies will be banned from any future iron ore exports to China," he said.

According to the iron ore trader, the CCCMC has reported the traders' requests to the Ministry of Commerce, and hopes that Chinese government intervention will bring about a more appropriate policy from the Indian government.

The policy has not yet been officially approved by the Indian Parliament, and major local iron ore miners are scheduled to meet with Indian authorities today in an attempt to persuade them to reconsider the new export duty.

"We now have to wait for a reaction from India, apart from halting Indian iron ore business since the duty came into effect, there is little more we can do," he said.

The CCCMC confirmed to Interfax that Chinese iron ore traders have decided on countermeasures to this sudden policy, but refused to disclose any further information.

Zhang Dongliang, an analyst with Shanghai Mysteel, said the Chinese traders might be willing to accept an increase of $5 per ton, if the cost is shared equally by both suppliers and importers.

"Both sides have to make a compromise somewhere, and there is little chance that the Indian government will scrap the policy," he said.

Nearly 80 percent of all Indian iron ore is exported China. In 2006, Indian iron ore exports to China surged by 9 percent to 74.75 million tons, a total value of $ 4.83 billion, according to statistics released by the General Administration of Customs.

[source: Interfax China, 9 March 2007]