India: BigMint's iron ore fines export index drops $4/t as trade slows on bid-offer disparity

• Domestic prices of Indian fines surge
  
  
• Bid-offer disparities stall negotiations
  
  

Low-grade iron ore fines experienced a price dip of $3-4/tonne (t) in the seaborne market following the Chinese Golden week holidays, as trading activity was sluggish. Negotiations were going on for several deals, but none were finalised due to bid-offer disparity between buyers and sellers.

BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index decreased by $3.5/t w-o-w to $63.5/t FOB east coast on 10 October 2024. No deal was recorded by BigMint in this publishing window.

A trader said, "Chinese buyers have shown interest in Indian low-grade fines but disagreements over pricing have stalled transactions. Buyers have been aiming for a price range of $76-77/t CFR China, while sellers are holding out for prices above $80/t CFR China, creating a stand-off in the market."

Recently, domestic prices of Indian fines have increased sharply, leading to higher average prices for portside traders. As obtaining Fe 57% grade material has become difficult, traders are blending the sub-Fe 55% and 58%+ variants to ensure cost-effectiveness. Shortage of iron ore still in the market owing to prevailing monsoon in the region.

A seller stated, "The People's Bank of China (PBOC) is set to hold its first post-holiday meeting this weekend, which may bring new policy signals affecting steel production and iron ore demand. Market participants are awaiting these developments before making substantial purchase decisions."

Chinese steel mills have adopted a more cost-effective strategy by blending medium-grade iron ore fines, which has increased demand for the material after the holidays. Margins at Chinese steel mills have dipped slightly compared to pre-holiday levels, which has added further pressure on Indian exporters. The market's direction in the coming days is expected to be influenced by the outcome of the PBOC meeting and potential adjustments in Chinese steel mill demand, as participants look for greater clarity on the economic outlook.

Iron ore inventories at China's major ports decreased by 0.6 mnt to 145.8 mnt on 10 October compared to last week, according to SteelHome data.

Price indicators

• One confirmed deal was reported this week, but it was not taken into price calculation under T1 trade. Thus, this category was given 0% weightage in the index calculation. For the detailed methodology, click here.
  
  
• BigMint received nineteen (19) indicative prices in the current publishing window, and fourteen (14) were considered for price calculation as T2 inputs and given a 100% weightage.
  
  

Factors supporting the seaborne market

• Chinese iron ore spot prices drop $3/t: The benchmark iron ore fines index decreased by $3/t to $105/t CFR China on 9 October against pre-holiday levels, following cautious optimism regarding Chinese economic policies and an uptick in trading activity. Following the government's macroeconomic stimulus, initially, there was enthusiasm in the market. However, participants are now waiting for concrete outcomes from the latest meetings between the People's Bank of China and the Ministry of Finance.
  
  
• DCE futures fall post-holiday: Iron ore futures on the Dalian Commodity Exchange (DCE) for the January 2025 contract fell to RMB 777.5/t ($110/t) on 11 October compared to pre-holiday levels. On a d-o-d basis, prices remained largely stable.
  
  
• Portside prices in China up w-o-w: Chinese sources said that Qingdao's portside offers for Indian iron ore fines (Fe 57%) rose by RMB 25/t ($3/t)w-o-w to RMB 620/t ($128/t) on 10 October, inclusive of import taxes and port charges. Meanwhile, portside pellet prices inched down by RMB 10/t ($1/t) d-o-d today.
  
  

Outlook

Seaborne iron ore prices are expected to remain volatile in the near term as market participants analyse the positions and pricing levels of trades. Clearer sentiments may be witnessed from Chinese mills in the next week.