Iron ore spot prices at nine month high

Spot iron ore prices touched near nine-month highs supported by firm Chinese buying and supply concerns in key producers Brazil and India. The shortfall of iron ore supplies prompted a surge in the spot prices of ore from India, Brazil and Australia to over $190 per ton.

The latest offer price by Vale for 64 per cent iron content fines stood at $195 per ton on CFR basis while Rio Tinto's PB fines (grading 61 per cent) were being quoted at $191 per ton.

Weather disruptions in Australia and Brazil and reports that another key ore producing state in India will likely suspend exports of ore have caused uncertainty in the market.

The state government of Orissa has asked the central government in Delhi to consider suspending exports from the state as it has signed a slew of MoUs with private and state producers and would like to conserve supplies for the period when these new plants come on stream. The state of Karnataka has already slapped a ban on the export of local iron ore resources.

Reports have now begun to circulate that along with suspension of exports there is also likelihood that export duties may be hiked from 5-15 per cent to a uniform 20 per cent.

The prices of iron ore may continue to rise after the Chinese Lunar New Year, or the Spring Festival, and perhaps exceed $200 per ton on CFR basis. Such levels were last seen in 2008, traders said.

Market players are also eyeing a potential Indian court ruling on the Karnataka ban later this month which could affect outcomes in both this state and Orissa, the other state contemplating a ban on exports