China has taken fewer shipments of iron ore from Iran over August and September, according to Refinitiv Eikon data, as additional export tariffs due to be imposed by Tehran have dampened risk appetites in the world’s biggest steelmaker.
Iran’s deputy minister of industries said earlier this month that exports of all steelmaking raw materials will be slapped with a 25% tariff to meet demand in domestic steel industry, according to Iranian state-backed media Press TV on Sept. 9.
The tariffs, which will cover various products from Iran’s iron mills, including iron ore and concentrates, will come into effect from Sept. 23, the Press TV report said.
Iran shipped 319,920 tonnes of iron ore to China in August, down 37.8% from July and 23.4% lower than a year earlier, according to Reuters calculations based on vessel-tracking and port data compiled by Refinitiv.
In September so far, China has taken 129,534 tonnes of iron ore from Iran, according to the same calculations and data.
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“Not many traders buy iron ore from Iran because of the U.S. sanctions,” said Zhao Yu, an analyst with Huatai Futures, adding that the freight charges are also high.
Two Chinese traders told Reuters they could only use cash and telegraphic transfer as payment methods, as it was “too sensitive” to go through banks for transactions with Iran.
“The main advantage of Iran ore is it’s low cost,” said a trader who buys 2 million to 3 million tonnes of iron ore from Iran a year.
“If (Iran’s) prices go up (from the tariffs), they can be totally replaced by other mainstream ores,” he said when asked why China did not buy more before the tariffs go into effect.
Source: Reuters