India iron ore export duty raised to 20%

India's exports of iron ore will be adversely hit by the four-fold rise in the export duty on fines announced in the budget, a senior trade official said.

"This will make the exports of iron ore uncompetitive in the global market," said R.K. Sharma, secretary general of the Federation of Federation of Indian Mineral Industries.

The world's third biggest iron ore exporter raised its export duty on iron ore fines and lumps to 20% to conserve the natural resource for domestic consumption.

Indonesia iron ore price stable at high levels

At present, the Indonesia iron ore market have not changed sharply, the market price is stable, and the suppliers said that they have not had done any deals with buyers.

An Indonesia iron ore trader reveals that they have much iron ore stocks at the warehouse, they get some inquiry from China, however, Chinese buyers think their price is too high and can not accept it. The iron ore suppliers said that the world price is rising from Feb. And they will not adjust down the price at present, and the iron ore price is at high levels. Now they offer iron ore 61% at 140-145USD/mt CIF China.

The suppliers told that although the buyers are not active to buy for the high price, they think the price will maintain high levels recently. But if China domestic production will increase sharply,  China do not mainly rely on imported iron ore, the price may be down at that time. For India restrict the iron ore export and the Australia flood affection, the spot price is at high levels now.

Weekly analysis about iron ore market

Prices for imported iron ore started to slide in this week. Prices for Indian iron ore fall from USD 198 MT in this Monday to USD 192 MT until this Friday, almost about USD 5/MT decreasing. At the same time, the international market turned to go down, with the prices USD 193/MT in the major Chinese ports.

On the other hand , spot prices for imported iron ore decreased by 20-30 RMB/MT. Prices for Indian iron ore 63.5% are between 1360-1380 RMB/MT, and 1400-1430RMB/MT for Brazilian iron ore 65%. For Australian iron ore , prices lay on 1300-1320 RMB/MT, and parts of local traders tried to attract buyers by lowering the prices. International offers for Brazilian iron ore 65% are USD 199-201/MT CIF, and USD 190-191/MT for Australian iron ore lump.

News from most steel factories reflected that it is hard for them to accept this high prices. So transactions run rather unpleasant in this week, and it's sort of stimulated the present prices. Chinese steel association declared that the high standard prices are mainly controlled by the Big three giant. And prices for iron ore which directly imported from traders by steel producers are higher than the average prices level, sometimes even high than the prices settled by the local iron ore traders who buy in first and sell out then. It is proved that there are some loss during the importing process.

In this week, International iron ore prices negotiation system which last for 40 year expired, instead the big three giant will make the prices by their own index system.

Prediction: Authorities predicts that prices in the second season will keep up. Prices for CVRD Carla gus grade 66% tend to reach USD199/DMT,with the increasing 15.9% when compared with the last season's USD172/DMT. For Rio tinto 62% BP fines,the FOB prices reach at USD170/MT , almost go up by 24% than that of season one.

Near days , international iron ore sea transportation turn to down.   Sea freight from Brazil to China is about 18.18 dollars/tonne, falling by 0.07 dollars/tons than that of last trading day. And sea freight from West Australia to China reach at 6.558 dollars/tonne ,rising by 0.016 dollars a ton than last day.

India Government Calls for more iron ore export constrains

Indian Steel Minister Beni Prasad Verma called for curbs on exports of iron ore on Friday, as the central government heads into a budget that could raise export duty on the steel-making ingredient marginally.

"Yes, I am in favor of it. There should be more control on iron ore exports," Verma said on Friday.

Government is unlikely to approve a blanket export ban as it would prefer better regulation and incentives for increased domestic use of the steel-making resource, as demand in the world's second-fastest growing major economy rises.

In April last year, government raised the export duty on iron ore lumps to 15 percent from 10 percent previously. Duty on iron ore fines stood at 5 percent.

The ministry of railways hiked the transportation cost 50 percent to Rs 1,500 per tonne on January 27, but kept it unchanged in Friday's Railway Budget.

The government presents its budget for 2011/12 on Monday.

"There could be a marginal hike in export duty (of iron ore)," said Vasant Poddar, vice-president at the Federation of Indian Mineral Industries (FIMI), a trade body.

"These curbs on iron ore exports are not warranted as nobody in the world, be it Europe, Japan, South Korea and U.S. consumes our low grade iron ore, other than China," he added.

Supplies of the steel-making ingredient from India have been limited by a ban of shipments from the southern state of Karnataka, which is currently being appealed by exporters in the Supreme Court. 

Mexico crops hit by extreme cold conditions

 Extreme cold conditions hit Mexico’s crops as major crops such as corn, sorghum and vegetables are the most hit. 

According to country’s agriculture ministry, freezes at the beginning of the month in the north of the country damaged more than one million hectares of crops. 

The extreme freezing temperatures hit a very broad section of major growing regions in Mexico, from Hermosillo in the north all the way south to Los Mochis and even south of Culiacan. The early reports are still coming in but most are showing losses of crops in the range of 80 to 100%. 

In Sinaloa, 143,571 hectares of corn and 15,900 hectares of sorghum were replanted as of Monday. Safflower and other crops were also replaced. In Tamaulipas, 130,000 hectares of sorghum and 10,000 hectares of corn were replanted. Meanwhile Sonora saw 2,200 hectares of vegetables and cotton replanted. 

Even shade house product was hit by the extremely cold temps. It will take 7-10 days to have a clearer picture from growers and field supervisors, but these growing regions haven’t had cold like this in over a half century. 

This time of year, Mexico supplies a significant percent of North America’s row crop vegetables such as green beans, eggplant, cucumbers, squash, peppers, asparagus, and round and roma tomatoes. 

Officials maintain that close to three million tons of lost corn will be recovered through replanting efforts, which have expanded to Tamaulipas and Sonora states after focusing exclusively on Sinaloa. 

Mexico-Brazil begin free trade talks on February 28

The governments of Mexico and Brazil will begin formal negotiations on Feb. 28 to reach a free-trade agreement, newspaper Reforma reported.

With the accord Brazil would cut tariffs from 12.5 percent to zero, while Mexico would reduce duties from 5 percent to zero, the Mexico City-based newspaper said, citing Brazil’s ambassador in Mexico, Sergio Florencio.

Mexican President Felipe Calderon aims to strengthen economic relations with Latin America, Europe and Asia to reduce its dependence on the U.S., the destination for 80 percent of the nation’s exports.

DUE DILIGENCE IS A MUST! NO IFS ANDS OR BUTS ABOUT IT!

THE IMPORTANCE OF DUE DILIGENCE –

Why "Check Out" a business or individual before doing business with them.

 Definition of Due Diligence:  The process of investigation, performed by investors (or in this case by SIs), into the details of a potential investment (purchase), such as an examination of operations and management and the verification of material facts.

It cannot be emphasized enough how IMPORTANT it is for you to perform DUE DILIGENCE both in your international business and in your personal affairs.

Most of the same due diligence resources we employ each day are addressed and explained in detail below.

Investigate Every Business or individual you are considering doing business with - whether that business is online or offline.

Here is a list of due diligence research tools that are invaluable to your business - be sure to use them (and bookmark them) starting today:

1.  Perform a Reverse Check on the company's or individual's telephone number.  The purpose of this is to learn if they have been at a location long enough to show up in a telephone directory.  Go to:  http://www.google.com - type in the phone number you are inquiring about and google will produce all the results they have on file and if the number is listed in a main phone directory, it will be listed at the top under the title "Phonebook Results".  (NOTE: this will not give you any details for an "unlisted" number and any business having an "unlisted number" should be a first caution flag for you to consider - if they want to do business with you then they should have a phone number that is 'public' and not hidden from the public).

There are other web sites providing this service also, just do a search in any major search engine for the terms "reverse lookup" or "reverse telephone lookup" (use the quotation marks to narrow your search), many will charge you a fee for additional details, most of which can be found through a Google search for free anyways.

Go ahead now and visit Google.com and enter our telephone number in the search box like this "915.440.0169" and see what you get.

2.  Do they give you a telephone number where you can call them?  If so, pick up the telephone and call them, but realize that today's technology can forward a call to any location without you (the caller) realizing it.

3.  Search for the owner's name on the major Search Engines.  Be sure to enclose their name in quotation marks, i.e., "James Doe" or common nicknames like "Johnny Beet ".

The quotation marks will help focus your search.  When using the Google search engine you should search their general search engine listings first and then also click on the Groups option which is one of the links above where you type in your search information request.

This type of search, especially on the Google Groups will sometimes turn up some very revealing information if someone or a business has been dishonest or has ripped off customers in the past.  Access to this type of information is one of the great things about the Internet; it allows you to perform verification and research on just about any individual or business for free.

4.  RIP-OFF REPORT - Before you spend any money with a business you found on the Internet or from which you received information through the mail, visit: http://www.ripoffreport.com - be sure to use their web site search engine.

Type in or copy and paste the company's name and/or the owner's last name and/or their telephone number and/or their web site address (hint: all you need is the web-site.com name (or .net, .org, .us, etc.) - you do not need the entire http or www stuff).  See if anything comes up.

Searching for just part of the company name and/or all of it, don't think by searching just one or two ways that you have covered all the bases, you must use a variety of different combinations and/or reference points to find anything that may be posted.  

SPECIAL NOTE: If you are unwilling to perform the little amount of research suggested to you here, you better forget about going into business for yourself, especially the import export business.  Quite frankly, if you do not perform due diligence, you are a mark looking for a rip off artist.  If that offends you, so be it, but it might just save you some of your hard earned money.

5.  Access to the owner or proprietor of the business or web site.  When evaluating who you can trust doing business with (especially on the Internet) ask yourself how easy has the owner(s) of the web site made it to contact them?  The more difficult it is to contact them, the more suspicious you should be of doing business with them.

6.  GOOGLE.com is the BEST FREE resource to help you locate information, both good and bad, on someone or on a business. Get acquainted with Google's "advanced" search option.  You can also use the advanced option to show one hundred results at one time, which makes it easier for you to scan over the results you find.

You can also use Google's advance search techniques with multiple data items so you could put in a business name in quotes followed by and with the city name in quotes.  It is a very powerful targeted way to search and find good and /or bad stuff on someone or a business. 

UCP 600 Financial Instrument Rules of Trade

Trade Finance

UCP 600 Financial Instrument Rules of Trade:

New rules for documentary credits

Key changes for internationally active companies




Application of UCP:

• If the documentary credit is to be subject to the UCP, this fact must now be explicitly stated in the text of the documentary credit.

• If a specific article is to be excluded, it must be so noted in the text of the documentary credit.

Definitations and Interpretations:

• A summary of definitions of key terms (e.g. “negotiation“), interpretations and clauses is contained in articles 2 and 3. This increases understanding of the new UCP considerably.

• Revocable letters of credit are no longer listed. Therefore a documentary credit should be considered irrevocable unless otherwise noted.

• Unless required to be used in a document, words such as “prompt“, “immediately“ and “as soon as possible“ will be disregarded. Every documentary credit must state the bank with which it is available or whether it is available with at any bank. By nominating a bank to accept a draft or incur a deferred payment undertaking, the issuing bank expressly authorizes the nominated bank to prepay the draft accepted or deferred payment undertaking or to discount it to the beneficiary. Thus the risk of any fraud is transferred from the nominated bank to the issuing bank or the applicant. The applicant should therefore be aware of the possible risks before initiating such a transaction.

Availability:

Every documentary credit must state the bank with which it is available or whether it is available with at any bank.

Nomination:

By nominating a bank to accept a draft or incur a deferred payment undertaking, the issuing bank expressly authorizes the nominated bank to prepay the draft accepted or deferred payment undertaking or to discount it to the beneficiary. Thus the risk of any fraud is transferred from the nominated bank to the issuing bank or the applicant. The applicant should therefore be aware of the possible risks before initiating such a transaction.

Standard for Examination of Documents:

• The amount of time banks have to examine documents has been reduced to five bank working days following the day of receipt of the documents.

• The addresses of the beneficiary and the applicant do not need to correspond exactly to the addresses listed in the documentary credit or any other document. However, they must be within the same country. Contact data (fax, telephone, e-mail and the like) listed as part of the beneficiary‘s or the applicant‘s address are disregarded. This rule does not apply if these data are listed in the “notify address“ section of a transport document. In this case, both the addresses and the contact data must correspond exactly.

• If a document contains a “shipper/consignor“ field, a party other than the beneficiary may be listed.

Multimodal or Sea Transport Documents:

• If a transport document is signed by an agent “for or on behalf of the master“, the name of the master does not need to be listed.

• The terms “multimodal transport document“ and “marine/ocean bill of lading“ have been replaced by the terms “transport document covering at least two different modes of transport“ and “bill of lading“.

• A charter party bill of lading may now be signed by the charterer or his agent.

Air Transport Document:

If the air waybill has a specific notation indicating the actual date of shipment, this date is considered the date of shipment, even if such a notation was not required in the documentary credit. In all other cases, the date of issuance will be considered to be the date of shipment.

TERMS YOU MUST KNOW

ASWP 
“Any Safe World Port” is often a term used by misguided intermediaries when giving cost of goods with freight cost applied. The acronym means that cost of freight is the same regardless of distance. For example, a CIF ASWP deal means that the goods being purchased cost the same if delivered within 50 nautical miles or 8000 nautical miles. Intermediaries need to address this term immediately when presented in an offer or RFQ and ask for an explanation. Most often than not, when ASWP terms are reflected the offers are fake. Please beware of such an ill acronym.


L.O.I.
Letter Of Intent (wrong use of term).
Most misguided intermediaries get the LOI application confused and thus misused during the early stages of the trade deal process. LOI is another flawed and unworkable application in the intermediary trading process. Others such as “B.C.L” (Bank Comfort Letter); “P.O.P” (Proof of Product) “N.D.N.C”, (Non Disclosure and Non Circumvention Agreement) and “M.P.A” (Master Pay Order for Commissions) are also not applied to intermediaries trading under proper applications. Most importantly – they are not even enforced by international courts. If you are reading this you have already been exposed to all the ill terms just mentioned and have probably dealt with them at a level. Many deals in the industry fail because of such misguided terms being or trying to be applied under trading process. The reality is that those terms are not applicable today and will cause the deal to delay and most likely to get dropped. The truth being told is that “LOI” stands for “LETTER OF INDEMNITY” and has no application for intermediary use.


M.O.U.
Memorandum Of Understanding is not so often used as the LOI application but is similar in practical meaning. It is often seen applied in an investment or construction contract applied abroad of which Intermediaries shall not trade in such deals. Such applications are not suitable for Intermediary use.


UCP600
Uniform custom and practice for documentary credits publication 600.
After July 2007 UCP500 ceased being the applicable bank application for matters pertaining to the rules of issuance involving the use of UCP600 financial instrument. Financial instruments are “Letters of Credit” that the Intermediary must secure from an End Buyer of goods being offered. The UCP600 rules are international applications that govern the way such letters of credits are secured and transacted upon. This means that once the Intermediary secures the financial instrument marked accordingly with the term “UCP600 applied” from an End Buyer then such rules take over in governing the trading application in matters of payments for such goods being purchased and sold.


PRINCIPAL
The Principal is the person leading the deal. The principal will control the situation at all times, will direct the situation, will inform others involved, will never count his money first and will always help and assist. In short, the Principal is the one who is protecting everyone’s interests and commissions at all times. Examples of Principal are: Buyer/Sellers, Suppliers and End-Buyers.


DELIVERY
For intermediary use the term “delivery” pertains to document presentation and may also mean “title” or a “leading” document presentation for goods being transacted upon.


SOURCING INTERMEDIARY (SI)
A sourcing intermediary (SI) is one who only assists within the whole “String Contract” application, in finding a Supplier or an end-buyer. A sourcing intermediary finds suppliers and or end-buyers and passes the information to us for proper review and confirmation. Once we confirm that the sourcing intermediary has successfully sourced either a supplier and or an end-buyer they will receive further steps to follow so a deal can properly become in active. Sourcing intermediaries are skillful and informed agents who understand proper applications and are willing to step back so that we can assist them in closing a transaction.


BACK TO BACK
For intermediary use – back-to-back procedures are advanced applications that only well informed and experienced traders should attempt. All our representatives should transact using bank used transferable financial instruments.


SLC
Intermediaries should use the “Stand-by Letter of Credit” to pay commissions and Performance Guarantees (PG) and not for the purchase of goods. The SLC is allowed to be transferred many times among intermediaries and can be refered to as “ISP98 SLC”. However, a SLC defined as “UCP600 SLC” can only be transferred once from the buyer/seller to the end-buyer as issued from the supplier and must be marked as “Transferable”.


IDLC
“Irrevocable Documentary Letter of Credit”. Irrevocable means that once accepted by the buyer/seller the DLC can not be cancelled.


PA TIDLC
“Pre Advised Irrevocable Transferable Documentary Letter of Credit”. Pre advised refers to the credit being operational but not yet active. The credit will become active once a precondition occurs under UCP600 and once the credit becomes active it should be transferred as irrevocable to the supplier as a non-transferable instrument.


CIDLC
This terms refers to “Confirmed Irrevocable Documentary Letter of Credit” where a credit is issued as “confirmed” is the highest credit the intermediary can have to close on the deal.


TIDLC
Transferable and Irrevocable Documentary Letter of Credit. For intermediaries there is no other way to trade correctly than to accept a TDLC from end-buyer. Under UCP600 the term “transferable” must be apparent on the credit being accepted. For example, the end-buyer issues the TDLC to the buyer/seller > the buy price is transferred to the supplier as a normal DLC > keeping the difference as commission payment.


L/C
This terms refers to Letter of Credit. Intermediaries should only use L/C to make commission payments as it can be revoked.


REVOLVING CREDIT
“Non cumulative TIDLC” is the payment instrument intermediaries need to issue, where the issuing bank needs to (and agrees) to honor revolving status on the credit for multi shipment deliveries.


P.P.I.
“Policy Proof of Interest”. The internet often misuses this term to mean “P.O.P” or “Proof of Product”. The term refers to your “interest” because the whole transaction is in your interest – meaning that the goods are being secured prior to the offer being issued and what’s actually being assured. “Proof of Product” can not be given before the contracts are signed and sealed by the end-buyer because circumvention can occur. For intermediary use, the “P.P.I” certificate is written in the body of the contract as a blank and the buyer/seller will fill it out once the irrevocable financial instrument has been secured and confirmed. Therefore, the buyer/seller will issue the contract stipulating that the P.P.I will be disclosed only after the financial instrument has been advised and accepted by the buyer/seller. Then, the blank document will be filled out by the buyer/seller and will be returned to the end-buyer with the information requested.


ADVISING BANKS
The buyer/seller bank is the advising bank.


ISSUING BANKS
The bank of the end-buyer issuing the irrevocable DLC is the issuing bank.


ACCEPTING BANKS
The bank of the supplier is known as the accepting bank.