China’s iron ore futures have risen about 7% since India raised export tariffs

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China’s benchmark iron ore futures rose nearly 7% in early trade on Monday, tracking their biggest daily jump in two-and-a-half months, as India extended export tariffs on some products to ease inflationary pressures.

Asia’s third-largest economy has increased export duties on iron ore and steel intermediates, new iron ore and concentrated tariffs have increased from 30% to 50%, and tariffs on pellets have increased from zero to 45%. The government has also removed import duties on coking coal and coke.

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India is one of the major non-mainstream iron ore suppliers to China, accounting for about 3% of China’s total imports in 2021.

However, China’s purchases from the country fell sharply in the first four months of this year due to growing demand in India and falling iron ore prices.

“The impact of the change in iron ore export tariffs in India is not significant,” said Cheng Peng, an analyst at Sinosteel Futures.

“The main problem is supply, and it will have a big impact on market expectations (that India can meet the obstacles created by the Ukraine-Russia conflict).”

The most traded iron ore futures on the Dalian Commodity Exchange for September delivery rose 4.4% to 864 yuan ($ 129.18) per tonne, up 6.9% to 884 yuan, according to 0208 GMT, their highest trading since May 6.

Singapore iron ore futures, for June delivery, rose 1.4% to $ 136 per tonne.

Coal coal fell 0.9% to 2,610 yuan per tonne, and coke jumped 1.2% to 3,437 yuan per tonne, a combination of other steel-making ingredients.

On the Shanghai Futures Exchange, steel rebar for October delivery rose 0.2% to 4,622 yuan per tonne and hot-rolled coils rose 0.3% to 4,762 yuan per tonne.

Shanghai Stainless Steel futures fell 1.9% to 18,595 yuan per tonne. ($ 1 = 6.6883 Chinese yuan) (Reporting by Min Zhang in Beijing and Enrico della Cruz in Manila; edited by Shuvrangshu Sahu)

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