September 03,
The top management of Rio Tinto expects third quarter Iron ore contracts to be priced around 13% lower compared with the previous quarter.
That is not much of a surprise, considering that Iron ore prices have been showing a downward trend due to lower off-take by steel companies, partly due to lower demand from China. Earlier, BHP Billiton Ltd, too, had indicated softer demand for Iron ore in the near term.
Indian iron ore miners such as Sesa Goa Ltd and NMDC Ltd are also likely to see their realizations fall, as domestic prices move along with international prices. In recent months, domestic prices have fallen due to the ban on iron ore exports from Karnataka and the drop in exports from Goa due to the monsoon.
The Chinese buyers do not have long term contracts with the Iron ore fines miners in India. So they have to buy it on the spot prices. Whereas, China has quarterly contracts to buy Iron ore fines from Brazil and Australia which is renewed every 3 months. And it is believed that the Chinese buyers are more interested in long term contracts rather than buying at spot prices. So this could be the reason why the spot prices of Indian fines are being stranded for a while whereas there is some movement seen in the prices of Australia & Brazil.
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