Export tax to further hit Iranian iron ore exports

: Metals
19/09/09

The Iranian government's plans to impose a 25pc tax on all exports of raw minerals, including iron ore and concentrates, from 23 September is expected to hurt already-limited pellet exports from the country.

Iron ore exports from Iran have already been declining since August and pellet sales have largely come to a halt, with the government not issuing any permits to exporters since 6 August in response to a domestic shortage. Last month, the Iranian government announced that permission from the ministry of mine, trade and industry is required for exports of iron ore, concentrate and pellet to protect domestic steelmakers.

The Iron Ore Producers and Exporters Association of Iran (Iropex) has opposed the government's export duty scheme and remains hopeful that plans for the export tax will be scrapped. At present, Iranian exports of iron ore fines/lump and pellet are subject to an 8pc duty, and exports of iron ore concentrate are not subject to any duty.

Iran's iron ore exports rose to 1.87mn t in July, up by 44pc compared with June, driven by significantly higher export prices compared with domestic prices. In March-June, Iranian export prices were up to twice that of domestic prices but the gap in prices have narrowed this month to about 3pc higher for export prices.

Since August, market participants have reported little or no fresh export offers from Iran. Despite the absence of export availability from Iran, low global demand stemming from narrowing margins from falling steel prices and steel production cuts in Europe has meant that Chinese steelmakers that import 95-97pc of Iranian iron ore are not showing any signs of strain.

Iran estimates that its consumption of iron ore will reach 160mn t by 2025, with a shortage of 30mn t after 2025.

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