target thursday , page-28

The Chinese has defaulted because they want lower prices, not because they do not want the iron.

The current metal prices - just suit the Chinese very well. Buy when everyone is selling like crazy due to fund redemptions rather than supply/demand.


http://www.reuters.com/article/rbssSteel/idUSDEL2392920080929

UPDATE 1-China buyers default on India iron ore deals -trade


NEW DELHI, Sept 29 (Reuters) - Chinese buyers of Indian iron ore are defaulting on import contracts and refusing to lift the ore unless the seller offers a discount on contracted prices, a top industry official told Reuters on Monday.

"Our exports are in deep red as there is no demand from China," said Rahul Baldota, president of the Federation of Indian Mineral Industries and managing director of miner MSPL Ltd.

Chinese appetite for Indian ore has fallen despite rival Brazilian miner Vale's (VALE5.SA: Quote, Profile, Research, Stock Buzz) demand for higher prices for the ore it exports to China -- a move that initially cheered Indian suppliers.

Nearly 75 percent of India's annual iron ore exports of about 100 million tonnes go to China, and shipments normally rise after the annual rainy season ends in September.

"The Chinese are backing off old contracts. They are saying either you reduce the price or we can't take the shipments," Baldota said. "I, myself, have had to suffer two cancellations."

He said importers were willing to buy high-grade 63.5 percent iron ore at about $75 a tonne, about 45 percent less than rates of around $140 in June.

Sesa Goa (SESA.BO: Quote, Profile, Research, Stock Buzz), Dempo and Salgaocar from India's western region and Essel Mining and the Rungta group of mines from the eastern sector are among the members of the Federation of Indian Mineral Industries.

Exports in the first half of September dropped to 1.99 million tonnes from 2.7 million tonnes in the same period last year. Shipments in August were also lower at 4.57 million tonnes against 5.39 million a year earlier, according to FIMI.

"If the situation continues like this, we will export only around 50 million tonnes in the year ending March. The problem has become severe in the last one month, though it was evident for the last three months," Baldota said.

The China Securities Journal reported on Friday that Chinese steel mills would not import iron ore from Brazil in the near term, after Vale asked for the price hike.

Export demand for even low-grade iron ore, 57 to 60 percent iron content, which are shipped mainly from the western Indian state of Goa, is also flat.

"Hardly any exporter is doing anything even though our shipments usually start picking up around this time," said Glenn Kalvampara, secretary of the Goa Mineral Ore Exporters Association.

India's iron ore industry has asked the government to remove a 15 percent duty on exports to help revive demand from China.

The levy was imposed in June after the steel industry said exports should be discouraged to ensure enough raw material for domestic firms. (Editing by Mark Williams)