Chinese importers have decided to boycott Indian iron ore in protest against Indian suppliers' attempts to increase iron ore prices.

The Indian government announced a duty of Rs 300 ($6.78) on each ton of iron ore exported from March 1, and the country's exporters intend to transfer the increased costs to Chinese buyers, even for contracts signed but not executed before March.

"Chinese iron ore importers have agreed that they will not accept the price rise put forward by Indian miners," said an official with the China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters, who refused to be named.

The boycott came on the heels of a conference the chamber of commerce held among major domestic iron ore importers on Tuesday.

The official said that Indian suppliers should strictly abide by the articles and prices included in contracts signed before March 1.

"It is not justifiable for them to regard the government's tariff increase as a force majeure," he said, adding that it should not become an excuse for failing to fulfill contracts.

The official declined to disclose importers' plans for dealing with new contracts with Indian miners after March 1. But some traders who attended the conference said they will not accept higher prices in later contracts.

India is currently the third-largest exporter of iron ore to China after Australia and Brazil, and China is the largest buyer of Indian iron ore. Last year, China's iron ore imports from India totaled 8.3 million tons.

According to statistics from the chamber of commerce, China would have to pay around $500 million more for iron ore from India each year if the price rises were accepted.

The government's decision to impose tariffs dealt a major blow to its iron ore business with China and forced a number of Chinese importers to halt all iron ore imports from India.

Domestic steel mills, which rely on the cash market, have been hit the hardest, said Zhao Zhicheng, an analyst with Everbright Securities, who monitors the international iron ore market.

He added that Australia should expect to see a surge in orders from Chinese importers for its ore, because Indian iron ore has become equally expensive since the duty was imposed.

Source: China Daily