The Hindu Business Line : Buzz on iron ore freight rates

Railways’ circles are abuzz with rumour that the classification of iron ore for other than domestic consumption might be scaled down from 200X, which incidentally is the highest freight rate in the Railways. The source of the rumour is this: iron ore exporters, having a long reach, are believed to have successfully lobbied with the powers-that-be in the Railways for a downward revision of the freight on iron ore for exports, emphasising that if the freight is brought down, the Indian iron ore fines will continue to be competitive in the world market. Now, iron ore exports are at a low, largely due to the drop in overseas demand. The international spot market price of the ore has sharply declined causing concern to the exporters. It is further pointed out that if the railway freight classification in respect of iron ore for domestic consumption could be as low as 170, there is no reason why the classification for exports should be so high, particularly when the export demand has slumped and when the Railways insists on dynamic pricing policy. But, then, dynamic pricing policy also presupposes upward revision in freight when the situation so warrants. A section in the Railways feels that, instead of tinkering with classification, the Railways should rather consider offering discounts depending on the traffic inducement.

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Buzz on iron ore freight rates