Author: Paul Ploumis23 Apr 2014 Last updated at 05:02:20 GMT
NEW DELHI (Scrap Monster): According to Citigroup Inc., the Indian Court verdict to lift the ban on iron ore mining in India would be bearish for the prices as it will increase the global surplus of iron ore. The Supreme Court (SC) of India had decided yesterday to remove ban on iron ore mining in the state of Goa.
Last month, iron ore has entered into a bear market due to the economic growth slowdown in China and boosted mining output from mining companies in Australia. This shifted the global seaborne market into a glut. Thus, the restarting of mining in Goa will again increase the supplies. This in turn will increase the exports to China. Incremental supply out of Goa will push the market into higher surplus and will depreciate the price value.
In SC’s order, it is said that the state could produce a maximum of 20 million tons a year after miners renew leases. Based on this order, Credit Suisse Group AG and Goldman Sachs Group Inc. also predicted the low price condition throughout the year. It is estimated that the prices will drop down to about $100 in the second half and how long it would stay like this would depend on the Chinese domestic production and demand.