DJ reported that Indian iron ore prices could fall to new lows in the next one or two months as the raw material piles up at ports due to poor demand, as consumption in China and other major markets slumps due to the ongoing economic downturn.
Mr Sidharth Rungta vice president of the Federation of Indian Mineral Industries told Dow Jones Newswires that the price of USD 50 per ton medium grade iron ore, with an iron content of 62% to 63%, is already a record low. Other official said that the downtrend is likely to continue in both spot markets and long-term contract rates.
Mr Rungta said that "There will be a further desperate selling. I expect prices to fall by at least a couple of dollars from the current levels of USD 48 to USD 50 per tonne. Mine owners are scaling down production. They are operating at 50% to 60% of their normal capacities."
Mr Rungta added that the further slide in prices by about a couple of dollars is expected to happen gradually over the next month and a half to two months.
Mr Rahul Baldota president of the Federation of Indian Mineral Industries said that "It will be weak. There is no positive news. Steel prices are down globally.”
Mr. Baldota said the outlook would remain weak for at least the coming three months. He added that an increase in railway freight rate effective January, coupled with a busy season surcharge levied from April 1st 2009 had further bloated their costs.
Source : Dow Jones