Indian low grade (Fe 58% and below) fines is currently attracting discount within the range of 35%-38% against price of Fe 56% index.
Discount has been consecutively increased since long time owing to less demand for Indian fines among Chinese buyers. In past few months, Indian fines attracted discount up to 11% against index, which has gradually moved to 20-25% and currently reached to 35-38% against index.
Chinese buyers prefer high grade material from Australia and Brazil over Indian fines owing to higher quality. In addition, owing to restriction imposed by Chinese government to reduce sinter usage has forced Chinese buyers to look for high grade material alternatives.
Alongside, Indian iron ore exports have also shown a tremendous growth in the past 1 year. After scrapping off export duty on low grade Fe 58% and below in Feb’16, Indian exports have grown and currently registered at 14.2 MnT (Apr-Dec’16), which is expected to reach to 17 MnT in FY17.
It is to be noted that, exports of low grade fines (below Fe 58%) is viable from India as it does not attract any export duty. However, exports of high grade ore (up to Fe 62%) may not be possible as it attracts 30% export duty. But as per reports, Miners’ body Federation of Indian Mineral Industries (FIMI) , has suggested the government to remove export duty of 30% on ore up to Fe 62% as against up to Fe 58% at present.
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