Iron ore price negotiations – Indian export tax to support freight premium

June 17, 2008

June 17th (Steel Guru) – It is reported that Indian government’s move of imposing 15% ad valorem export tax on all grades of iron ore from last weekend, is likely to support the quest of freight premium by Rio Tinto and BHP Billiton

The increased tax scheme would total USD 21 per tonne on current FOB price of USD 140 per tonne.

Market insiders predict that the Indian ore export duty would not impact on spot ore imports market in short term and the policy would be felt 6 months or 1 year later.

But the fact is that the actual effect on Indian iron ore miners would to a small extant only as 62% plus grade iron ore was already attracting INR 300 per tonne (USD 7) and the Rupee appreciation by about 7% would nullify it further by USD 10.

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