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India’s iron ore exports rise to 8-year high on China’s 20 million-tonne purchase till June

China relies heavily on imported iron ore to fulfil more than two-thirds of its demand, and purchases have jumped on robust demand from steel mills.

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New Delhi/Mumbai: China’s purchases of iron ore from India rocketed to an eight-year high in the first half of 2020, fueled by supply shocks at major producers and record steel output at the world’s largest steelmaker.

Shipments of the raw material from India more than doubled to 20 million tons in the six months through June from a year earlier, according to China’s customs data. It was also the highest since the South Asian country shipped out 27.8 million tons in the first half of 2012.

China relies heavily on imported iron ore to fulfill more than two-thirds of demand, and purchases have jumped on robust demand from steel mills. The country has long sought to diversify its sources of iron ore, nearly 65% of which came from Australia in the first half and 17% from Brazil, to rein in supply risks and price volatility. That push has become more urgent after supply disruptions at Brazil’s Vale SA.

While India’s exports are rising, they were still a small sliver of China’s 547.2 million tons of total ore imports in the first half. India’s higher exports, including of steel products, come at a time when the coronavirus pandemic is pushing the country toward its first annual contraction in more than four decades, and tensions with China are rising. Prime Minister Narendra Modi’s government is pushing through measures to cut reliance on Chinese imports after a border conflict worsened economic ties between the two nations.

“Indian iron ore exporters are happy to ship out more volumes given that domestic demand remains quite weak, allowing them to liquidate their inventories, while prices are also quite supportive,” according to Priyesh Ruparelia, a vice president at ICRA Ltd., the Indian unit of Moody’s Investors Service.

Iron ore futures in Singapore jumped as much as 3% to $108 a ton, following positive comments from Rio Tinto Group on the robust state of demand in top user China.

The difference between Indian iron ore prices and import prices in China is about $70 a ton and even with a 30% export duty on higher grades, Indian exporters will still be able to make profit on it, Rupareliasaid.- Bloomberg


Also read: Drop in Chinese exports to US didn’t help India, says Rabobank


 

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1 COMMENT

  1. The INDIAN Steel unit is an IDEAL MODE OF RAISING CASH and MONEY LAUNDERING w/o limit ,even w/o mining activities – and this is the only aspect ,which attracted the Marwari community,to this trade

    o Steel was subject to ED (Excjse Duty), which is a MODVAT able tax

     In a 20 million tons steel plant,2-3 % of production can be explained to the state as wastages, yields, input mix issues etc.
     If 4-5,00,000 tons of steel, is sold in cash – there is enough cash generated by the steel unit – and the steel is sold, free of VAT, to a user,who does not need VATABLE steel

    • If inputs are bought in cash,then more and more steel can be sold, in cash –as the sales HAVE TO BE OFF THE BOOKS OF ACCOUNTS

     The Steel unit makes the ED/GST invoice of the 5,00,000 tons of steel,for steel which has been sold already in cash
    • THE ED/GST invoice is then sold by the steel unit,to a steel user, WHO CAN AVAIL OF THE VAT BENEFIT – AT SAY,40% OF THE VALUE OF THE VAT/GST INVOICE

    o THIS STEEL USER IS ACTUALLY USING STEEL BOUGHT IN CASH
    • THE STEEL USER MAKES A WIRE TO THE STEEL MILL, AND THE STEEL MILLS PAYS THE CASH TO THE STEEL USER, FOR THE BASIC STEEL PRICE BILLED
    • THE CASH PAID TO THE STEEL USER BY THE STEEL MILL, IS GENERATED FROM THE 500,000 TONS OF STEEL, SOLD IN CASH

     THIS SYSTEM OF TRADING IN CASH AND TRADING IN GST AND TDS INVOICES, IS A METHODOLOGY DEVELOPED BY MARWARIS, AND THE TAX POLICIES OF THE STATE, HAVE BEEN MADE, TO ALLOW AND PERPETUATE THESE METHODOLOGIES – and that IS WHY THE STEEL INDUSTRY IS RUN BY MARWARIS – WHO HAVE HAD CLOSE LINKS WITH POLITICAL PARTIES SINCE THE 1970s.dindooohindoo

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