Offers beats up after Indian state Karnataka keeps export ban
Proposals to sell iron ore edged up on Monday on the fears relating to supply, after Karnataka imposed a ban on exports of the steelmaking raw material. The Karnataka High Court on Friday advocated an order banning deliveries of iron ore from the southern Indian state, thereby extending a measure that has been in place since July and has pressurized many times to close. The state of Karnataka accounts for nearly around a quarter of annual iron ore exports from the whole of India, which is the world’s third biggest supplier that ships around half of its annual output accounting to more than 200 million tons.
The Commonwealth Bank of Australia mentioned in a special note that the decision will help to keep the seaborne iron ore market tight and is likely to see spot prices supported over the forthcoming months. The iron ore consisting of 63.5 percent iron content was offered at the market at rate of $164 for a ton, cost and freight in China, as said by the Chinese consultancy Mysteel, an increase from a low of $163 as it appeared on Friday.
Apprehending a further increase in its prices in future, iron ore forward swaps witnessed a boost of growth on Friday with the Singapore Exchange-cleared December contract gaining roughly around $1.30 to $160.50 a ton and also the January contract thus adding 55 cents to $157.45 a ton. But China’s decision on Friday to increase the banks required reserve ratio which could actually lead to cutting lending to the construction sector and thus hampering the demand of steel in the markets and consequently iron ore too may help to offset any serious consequences from even tighter supplies from the nation of India.
The People’s Bank of China which is putting in all its efforts to battle the high rates of inflation that is running at a two year high remarked that the measures were implemented for the sole purpose of strengthening liquidity management and also to appropriately have a good control over money and credit issuance. The steel Index iron ore benchmark witnessed an easing by 40 cents to $162.80 a ton on Friday.
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