Monday, December 21, 2020

Indian & Chinese troops at war in the Himalayas, but Chinese demand for Indian iron ore and steel products is booming despite India's 30% export surcharge on iron ore: Lessons for Australia's childlike approach to trade with China

 by Ganesh Sahathevan 



Himalayan standoff is more about wider strategic rivalry and the Belt and Road Initiative than dispute
 mountain borderlands


The commodities industry paper Argus Media said in March this year that India's  exports of iron ore were booming to markets including China, despite India's 30% iron ore export surcharge on premium grades, and preferential treatment with regards Japan and Korea.

By October it was being reported that iron ore and steel exports (from India) had "reached new highs in the last two months on the back of strong demand from China".


Meanwhile, India and China remain entangled in a Himalayan standoff  that had escalated into skirmishes between their troops. India and China have reported casualties including at least 20 dead on the Indian side. 

In Australia on the other hand politicians and various experts are worried that China will stop buying  tariff free higher grade Australian iron ore if China is further offended by a range of  issues , including Australia's plans to diversify its export markets. This childlike response to business issues is clearly undermining Australian national interest.  

It ought to be clear by now that the China-Australia Free Trade Agreement negotiated by Andrew Robb and Peter Vargehese is in need of urgent review


TO BE READ WITH 




India's iron ore pellet export up on Chinese demand

India's iron ore pellet exports in 2019 increased by around 53pc on the back of robust demand from China.

The country's overall pellet exports were at 12.86mn t in 2019 compared with 8.42mn t in 2018, according to government data.

Exports to China gained by over 51pc to 9.83mn t in 2019 compared with 6.5mn t in 2018.

Sintering curbs in China through 2019 grew demand for direct-charge material such as lump and pellet. An accident at Vale's Feijao iron ore mine in Brazil on 25 January 2019 and the resultant closure of some mines also sharply reduced pellet availability globally, and bolstered demand for Indian pellet.

Oman was the second largest importer of Indian pellet at 744,630t in 2019, while it had not imported any Indian pellet in 2018. A squeeze in steel margins and tightness in Vale's supplies may have prompted Oman-based mills to use Indian pellet, cutting back on their use of high-grade direct-reduced iron pellet.

South Korea, Turkey and Malaysia were other major pellet importers for India.

India's exports of iron ore fines and lump increased by over 86pc in 2019 to 18.35mn t from 9.86mn t in 2018. China's import of Indian ores more than doubled to 15.75mn t from 7.67mn t in 2018.

China stepped up purchases of low-grade Indian fines, largely from India's east coast, to control costs amid shrinking profitability.

Japan lifted Indian iron ore imports by 19pc to 1.77mn t, and South Korea stepped up imports by 97pc to 587,000t.

Japan and South Korea have government contracts with India for the supply of state-controlled NMDC's high-grade fines and lump. No other Indian producer exports high and medium-grade ores because of a 30pc export duty on ore grades above 58pc Fe. NMDC is charged a concessional 10pc export duty for its shipments to Korea and Japan.



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