During the meetings recently held by the China Steel Industry council, it was revealed that 16 steel companies have decided to temporarily stop buying iron ore from India. The decision to halt purchasing was caused by the fact that the Indian government recently proposed a 7 USD a ton duty on the export of iron ore.

Exports of iron ore from India's eastern ports have stopped as mining companies are protesting against a tax imposed on the overseas sales of the commodity. Indian exporters are beseeching their government to scrap the iron ore tax, which was imposed on February 28th. A prolonged disruption in supplies from India, which holds the world's fifth-largest iron ore deposit, may boost prices in China, which buys half of the world's exported iron ore.

According to a steel industry analyst, the tax will make the Australian ore and Brazil ore more competitive for Chinese steel companies. Particularly, it increases the appeal of relatively cheaper Australian iron ore, which is available and convenient for China due to Australia's geographic location.

Australian iron ore accounted for about 40 % of the 326.3 million tons bought by China last year. Brazil, which sold 76.4 million tons, was the second-biggest supplier followed by India.