India: BigMint's iron ore fines export index falls $2/t w-o-w on weakening demand

• Low-grade fines discounts at 18-20%
  
  
• Global fines spot and future indices drop w-o-w
  
  

Iron ore fines export prices dropped this week, driven by weakened demand in the Chinese market and a fall in global fines indices. Chinese mills have been scaling down steel production, reducing their appetite for high-cost Indian materials. As a result, buyers have become cautious, seeking cost-effective alternatives.

BigMint's bi-weekly Indian low-grade iron ore fines (Fe 57%) export index decreased by $2/tonne (t) w-o-w to $65/t FOB east coast, India, on 19 December 2024. As per the sources, a 55,000 t fines (Fe55-57%) export deal got concluded at $76.5/t CFR China for January delivery a couple of days back.

Market sources revealed that some export deals were under negotiations at an 18-20% discount, reflecting the subdued market conditions. Additionally, Indian exporters are largely adopting a wait-and-watch approach, expecting a price rebound by the end of December.

An exporter commented: "With steel production declining in China, mills are unwilling to pay a premium for Indian iron ore fines, leaving exporters with limited options."

Another exporter said on current market dynamics: "Exporters are facing challenges due to high raw material prices, making domestic procurement unfeasible. Current domestic offers are excessively high, and with export prices under pressure, the margin squeeze is becoming a significant concern."

Despite the current downtrend, there is still optimism for a recovery later in December, as participants closely monitor market movements and await favourable opportunities for new deals.

Chinese spot, futures prices fall w-o-w: The benchmark iron ore fines index fell by $2/t w-o-w to $103/t CFR China on 18 December driven by weaker winter restocking, ample supplies, and easing concerns over Australian supply disruptions from adverse weather. Additionally, Chinese steel mills faced narrowing profit margins, prompting increased blast furnace maintenance and reduced molten iron production, further dampening demand for iron ore.

Iron ore futures on the Dalian Commodity Exchange (DCE) for the May 2025 contract decreased by RMB 34/t ($5/t) w-o-w to RMB 778.5/t ($107/t) on 19 December. However, d-o-d, prices remained largely stable today.

As per reports, the property market in China remains weak, with macroeconomic announcements primarily aimed at boosting sentiment; real improvements will depend on the implementation of measures.

Meanwhile, iron ore inventories at China's major ports decreased by 0.35 million tonnes (mnt) to 147.8 mnt on 19 December November compared to last week, according to SteelHome data.

Price indicators

• One (1) deal was reported in this publishing window and considered for price calculations. Therefore, T1 trade was given 50% weightage in the index calculation. For the detailed methodology, click here.
  
  
• BigMint received Fifteen (15) indicative prices in the current publishing window, and thirteen (13) were considered for price calculation as T2 inputs and given a 50% weightage.
  
  

Outlook

According to BigMint analysis, iron ore prices are expected to remain volatile in the coming days, driven by weak market sentiment from Chinese steel mills as regards seaborne cargoes. This may also impact India's export prices.