KOLKATA (miningweekly.com) - The Indian iron-ore fines export market has been hit by panic with export offers plunging 13% over the past month.

The export price for Indian high-grade iron-ore fines has been under downward pressures since the beginning of the year and this turned into a crippling bear hug over the past week, threatening to bring outward shipments to a complete halt.

According to several traders and mine exporters, export offers were down to a level of $105/t cost and freight China, down 13% compared to offer prices last month, with 10% of the losses coming in the past week.

Traders and miners said that while export volumes had been falling over the past months, buyers, which consisted mostly of traders representing Chinese steel mills, had not made any purchase commitments since early this month and even the continuous lowering of export offers failed to evoke any buying interests.

Sources told Mining Weekly Online that a convergence of several negative factors in China and India had hardened the bear sentiments in the iron-ore export markets with medium-term outlook becoming very negative.

On the buyers’ side, depression in the commodity market in China coupled with excess stocks and liquidity problems faced by steel mills in China had put off any fresh purchase transactions for Indian iron-ore.

Simultaneously, on the supply side, the stiff 30% export tax on Indian iron-ore fines, the recent levying of a 5% export tax on iron-ore pellets and high freight costs made outward shipments at prices below $120/t unviable for Indian ore exporters.

Traders said that the latest crash in prices would bring export shipments, already on a downward curve, to a complete halt. Indian iron-ore shipments in February were estimated at 900 000 t, down 17% compared to the corresponding month of the previous year. No exports of iron-ore pellets were reported in February 2014, following the imposition of the 5% export tax in January.

Five iron-ore pellet plants across the country had stopped production, claiming that the export tax had made export shipments unviable. India currently had 36 iron-ore pelletisation plants with an aggregate capacity of 63-million tonnes a year, and according to industry these were being operated at 50% capacity.

Market sources and analysts said that Indian iron-ore export prices continued to have further downside risk potential of  $3/t to $5/t in the short term and, as stock at Chinese ports was estimated to be in excess of 100-million tonnes, no strong rebound was expected.

Furthermore, Indian exporters were fearful of payment default by buyers in view of reports of a liquidity crisis in the steel industry in China, they added.