Indian Exporters Expect Price Cut in Upcoming Goa E-Auction

Government of Goa intends to clear mined stock for recommencement of fresh mining from October.

Indian exporters are much worried these days as the government is offering iron ore at higher base prices in Goa e-auctions. In a recent meeting conducted between the government, miners and exporters, it was discussed that base prices for upcoming 8th e-auction may be reduced and will be informed to market later this week.

Previous few Goa e-auctions did not receive adequate response for the same reason, ‘higher base prices’. In the previous e-auction conducted on 04 Aug’15, total 1 MnT low grade iron ore was offered. Unfortunately, only 55,450 MT could be sold as interest from sponge iron manufacturers, exporters, small steel mills narrowed down due to higher base prices.

The government also intends to clear the mines site in order to recommence fresh mining from October 2015. Post mining suspension was revoked in the state in  Sept’12, the government has only been able to sell 5 MnT of ore out of 15 MnT, stocked since ban was imposed three years ago.

Global iron ore market in a challenging phase

Overall global iron ore market is going through a challenging phase. Prices have been slumped owing to weaker demand by world’s top iron ore consumer China, currency devaluation and oversupply by various big miners. In addition, Rio Tinto, one of the biggest Australian iron ore producer, has decided to export 240 MnT iron to China this year. Rio Tinto’s plan may drive down prices further.

Spot iron ore prices in China touched to a new 10-year low at USD 44/MT in July and are currently at USD 55-56/MT CFR China. Analysts are not confident about how long these prices will sustain. Looking at oversupply and slowing demand in China, it is anticipated that prices will touch USD 40/MT soon. China’s steel consumption is also expected to fall further this year.

CNF China Spot iron ore Prices as on 24 Aug’15 

Source: SteelMint