India Intends To Levy Export Tax On 20% Iron Ore

On the one hand, India is the main supplier of China's spot iron ore - in the past 5 years, it is in China

China's steel industry has once again heard rumors of bad profits on raw iron ore.

"The India government plans to levy a 20% levy on iron ore exports in 2011 to 2012 fiscal year April 1st.

Three tariff increases in two years

This is not the first time the India government has increased the export tariffs on iron ore.

In December 22, 2009, India raised tariffs on exports, raising the export tariff from zero to 5% at the time, and increasing the volume of ore from 5% to 10%.

In April 29th last year, the India government announced that it would raise export tariffs on iron ore and cotton, among which the export duty of lump ore increased from 10% to 15%.

Today, the export tariffs on iron ore will probably increase by about 5%.

"Whether or not the above information is true, to a certain extent, highlights the increasing awareness of India's protection of domestic mine resources, and India's superior quality iron ore mountain is becoming scarce."

Yesterday, Lange Iron and steel network analyst Zhang Lin told the "international finance daily" reporter, "India itself is a big consumer of iron and steel, the demand for raw materials in the next few years will be increasingly strong."

In fact, in order to protect its resources, India also restricted the export of iron ore last year.

India media analysis said that the Levy of 20% on iron ore exports will not only help curb export, stabilize domestic iron ore prices, but also increase government revenue.

In addition, RKSharma, Secretary of India mining industry alliance, predicts that the export volume of iron ore in the fiscal year will not exceed 90 million tons in comparison with the 1.17 tons of iron ore exported from 2009 to fiscal year 2010.

Pressure on Chinese steel enterprises

"This will push up the price of iron ore in the Chinese market."

Joint metal net analyst Hu Kai told reporters, "on the one hand, India is the main supplier of China's spot iron ore. Its share in the Chinese market has been stable at about 20% in the past 5 years. On the other hand, the iron ore market is relatively hot now, and the India iron ore exporters will pass the pressure on China, that is, the cost of the levy must be borne by China."

At present, the spot market "weathervane" - 63.5% of India's ore price has risen to a high level of 180 US dollars / ton.

Zhang Lin also believes that once the above information is confirmed, not only will spot prices again have an excuse for speculation, but Chinese steel enterprises will also be under tremendous pressure.

"On the one hand, this pressure is a huge cost, but on the one hand, the layout and distribution of resources have become even more difficult."

In particular, many steel companies in China are still unable to get rid of their dependence on foreign mines, including the India mine, she said.

What worries Zhang Lin more is that once the news is confirmed, it will become an excuse for the three big miners to increase their prices several times.

In fact, the three largest suppliers of iron ore have been active in the Chinese market.

Among them, Vale put forward a 8.8% price increase request, BHP Billiton even recommended monthly pricing way.

In addition, Credit Suisse released a report that "raw material supply and demand in the first half of this year is quite tight. If supply deteriorates, the spot price of iron ore may break through the previous record level of US $200 / ton, and the second quarter may be further higher."