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Before the election which handed him victory, Trump promised to block the deal if re-elected.
Although some Asian firms have found creative ways of doing business with Iran, European iron ore traders and shipping companies are shying away completely from transacting with the country as US-led sanctions start to have an impact.
There is no formal ban on the iron ore trade with Iran, ranking sixth in terms of exports, but shipping firms and traders in Europe nevertheless are balking at the financial and political risks in dealing with Iran reports Poten & Partners:
“No banks will touch Iranian business,” a second steel and iron ore trader said. “The only way would be to finance the trade yourself, but there is no company willing to do it now. The political risk is too high. There could be a war, an export ban and then your money gets held up.”
Tehran exported almost 17 million tonnes to China last year, by far the largest recipient of the steelmaking ingredient according to Bloomberg.
Wang Zixuan, co-founder and chief executive officer of Docom Industry Co. that buys as much as 900,000 tons of ore from Iran’s state-owned miners a year and sells to China, said a total of $6 million of capital was frozen twice – this year and last year – by the U.S. because of doing business with Iran.
“Some Chinese companies are buying iron ore from Iran using fake contracts to hide the origin of the suppliers,” Wang said. “They are doing a dangerous thing. There’s a high risk of losing money.”
Although Iran’s exports are too small in the context of the global iron ore seaborne trade – estimated at between 800 million and 1 billion tonnes per annum – to have an impact on prices, it comes on the heels of further declines in Indian exports to China.
Forecasts are for 40 million tonnes in the fiscal year 2012 – 2013 according to India’s minerals industry federation. 2011 was already a terrible year for Indian exports with preliminary figures showing roughly 60 million tonnes were exported, down from 100 million tonnes in 2010 – 11.
The spot price of 62% iron ore imported into the port city Tianjin in northern China on Monday was pegged at just over $142/tonne, recovering from October last year when the market experienced a mini-crash. Spot declined from a record high of $180 to a low of $116/tonne over the month, before clawing back some of the losses.
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Comments
Brian R. McCaughrin
What goes on in Iran, and China is not U.S. Business. They should take care of there own problem in USA, which are many!