Economy, Business And Markets

Breaking China Monopoly Over Iran Iron Ore

Breaking China Monopoly Over Iran Iron OreBreaking China Monopoly Over Iran Iron Ore

Iron ore prices in Iran have recently jumped to $52.5 per ton after the Association of Producers and Exporters of Iron Ore handed over the pricing of this commodity to the Metal Bulletin, a specialist international publisher and information provider for the global steel, non-ferrous and scrap metals markets.

Previously, the pricing was monopolized by China-based Umetal for years, undermining the competitiveness of Iranian producers. In fact, China is the main destination of Iranian iron ore, accounting for more than 90% of the exports of this key mineral, Donya-e-Eqtesad reported.

According to a member of the Association of Producers and Exporters of Iron Ore, Masoud Razfar, the base Iran iron ore prices announced by Umetal were about 15% lower than the global average.

The shift towards pricing by Metal Bulletin will “improve the recognition of Iran iron ore as a brand in the international markets” and benefit the entire domestic iron ore industry, he said.

Alireza Siasifard, another member of the association, believes the breaking of Umetal’s monopoly over Iran’s iron ore prices will paint a bright future for private and small domestic producers, as the industry is capable of meeting the domestic iron ore demand, and the increase in prices will enable these firms to focus solely on exports and turn the corner amid the current economic recession.

Currently, Umetal has priced Iran’s magnetite iron ore with 60% purity at $41 per tons, significantly lower than Metal Bulletin’s announced base prices, and apparently there is no sign of China approving the new rules of the game.

“If domestic producers unanimously embrace Metal Bulletin’s prices, the Chinese will sooner or later have to conform to the new base price, as they need Iran’s iron ore,” said Siasifard.

Iran exported 22 million tons of iron ore in 2014, making it the ninth biggest in the world, according to data from the International Steel Statistics Bureau.