IMPACT OF IRON ORE PRICES AND ITS IMPACT ON INDIAN MARKETS

The commodity market lately underwent alarming changes with iron ore commodity being the most affected. The iron ore prices were at a record high at $230 in May and have since then fallen by 50% thus drastically affecting the segment. This price also show some corrections in the market after the record high in May. Reasons for the fall were due to latest straw pulled by China steel mills to dump the raw material and the decision to curb carbon emissions as their steel industry contribute around 10% to 20% of the country's carbon emissions (in the upcoming months).

Athough the crude steel production has reduced in the past months in China, with demand been high when there is shortage in production plus the output also being more dearer due to tariffs laid by the outgoing Trump Administration

China's contribution of iron ore products is approximately 57% (of world output) which would indicate that it can easily sway the global markets thus controlling the imports from other countries w.r.t to construction activities and allied activities as the countries dependent on such produce will face shortage in their development activities.

The impact due to plunge in China iron ore prices will be felt globally in others countries such as India will have to reduce their prices to make the trade prices competitive and industries related to steel, aluminium, consumer durables, automobiles, real estate and infrastrcuture to name a few will be able to increase their profitability as compared to earlier prices. Due to these fluctuations there would be an increase in demand for iron ore and all allied commodities consumption, reduction in production cost for the inter related sectors and improvement margins in automobile, infrastructure, real estate, etc. All in all, there will be a positive sign for India.

Thank you.

Regards,

Charmin Monteiro,

Kautilya,

IBS Mumbai.