Indian Iron-Ore Prices May Double on China Revival

India’s iron-ore export prices are expected to double from last year’s low as China, the world’s biggest steel producer, raises purchases, an industry group said. Prices for immediate delivery are expected to increase to as much as $90 a metric ton in the “near-term” from $45 in November, said R.K. Sharma, secretary general of the Federation of Indian Mineral Industries, a grouping of iron-ore miners. Prices are currently about $84 a ton, he said. India’s iron-ore exports in December rose 38 percent, the first gain in eight months. China’s steelmakers, which cut output in the second half, are benefiting from the 4 trillion yuan ($585 billion) federal stimulus plan to revive growth. “Mills in China’s northern province of Hebei are ramping up production because they have returned to profit, increasing the need for ore,” said Du Wei, head of iron ore at Shanghai’s Umetal Research Center. “Ore stockpiles at the plants are very low.” Iron ore inventory at major ports in China rose 7 percent since the end of the Lunar New Year holiday. Stockpiles rose to 61 million tons at the end of Feb. 6 from 57 million tons in the week ended Jan. 23, said Hu Kai, another analyst at Umetal. The Lunar New Year holiday ended Jan. 30. Production, Reserves India produced 160 million tons of iron ore in the year ended March 31, two-thirds of which was sold to China, according to the federation. The nation holds 25 billion tons of ore reserves, 4 percent of which is high-quality ore. “The tone of the market has become bullish,” Sharma said. China’s stimulus package, which will boost spending on housing and railroads, has revived steel demand, the Ministry of Commerce said on Feb. 5. Local benchmark steel prices jumped 46 percent from November when the government announced the package. The Baltic Dry Index, a measure of bulk commodity shipping costs, more than doubled between Feb. 6 and the 22-year low on Dec. 5. Steel demand may rise by the end of the first quarter, Lou Schorsch, head of the flat-rolled business in the Americas for Luxembourg-based ArcelorMittal, the world’s largest steelmaker, said last week. International prices of iron ore and coking coal, the main steelmaking materials, surged to a record last year.