Spot Iron ore
dropped further on Friday as buyers help purchases in anticipation of further drop
in prices. Quotes for Indian fines Fe
63.5/63 dropped to $143/MT i.e. down by $1-2/MT. Similarly, quotes for
Australian Newman fines Fe 63 slipped by $2/MT to reach $139-141/MT.
Falling iron ore
prices normally draw Chinese buyers back into the market, but traders say they
could be waiting for a further correction.
“The question
is at what price they will come back to the market – is it $5 lower or $10
lower from current prices? It will all depend on steel prices. If physical
demand for steel comes back then they will buy iron ore.” said a Singapore
trader.
In the domestic market of China, Govt. has raised a
resource tax on iron ore in a move aimed at conserving resources and curbing
pollution.
The tax rate for iron ore has been raised to 80% from the
previous rate of 60%. Higher resource
taxes on iron ore will add an average of around 10 yuan/MT to the cost of
domestic concentrate, industry sources said.
The increased cost
of domestic iron ore may encourage steel mills in China to go for more imports
and this may turn out to be slightly positive for the Iron ore import market
which has been lull since the re-opening of market post Chinese New Year.
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