China threatens to boycott Indian iron ore

Beijing: China has threatened to boycott Indian iron ore as a protest against the recent decision of finance minister P Chidambaram to raise the duty on iron ore exports.

The Chinese steel industry said it would obtain iron ore from other sources like Australia and Brazil to meet the shortfall that would be caused by the boycott move.

The trade on this commodity has already come to a halt with local buyers asking several China-bound ships to return to India. The duty hike of made Indian iron ore more expensive as compared to the commodity shipped from Australia and Brazil, the industry said.

The Chinese threat, if it is comes through, would mean a crash in total Indian iron ore exports to China. China is the biggest destination for Indian iron ore, while India is the third largest supplier for the Chinese steel industry.

Sources said finance minister Chidambaram's move was aimed to meet the rising demand for iron ore within the country as well as discourage the use of Indian iron ore to feed the runaway growth being seen in the Chinese steel industry, which directly competes with Indian steel.

Sources in the Indian industry said the threat was exaggerated as iron ore is in short supply worldover and it is impossible to replace Indian exports in a short period.