India: BigMint's iron ore fines export index falls $4/t w-o-w

• Sharp drop in iron ore spot, futures prices w-o-w
  
  
• Inventory at Chinese ports hit 150-mnt mark
  
  
• Low steel demand in China affects seaborne prices
  
  

BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index decreased by $4/t w-o-w at $59/tonne (t) FOB east coast on 11 July 2024. An exporter concluded a deal for around 55,000 t of Fe 57% fines from the east coast at $72-73/t CFR China in this publishing window. Another 55,000 t of fines (Fe 57%) deal was heard concluded by a south India-based exporter at $74.5-75/t CFR China a couple of days back.

The discount for lower-grade fines was 22-25% on the global fines index and remained stable compared to last week.

Indian low-grade fines prices in the export market remained under pressure this week following a significant drop in iron ore spot and future prices amid weaker steel demand in the Chinese market. Buyers are looking to purchase cargoes at cheaper prices due to cost and margin concerns.

An iron ore exporter said: "Iron ore prices in China dropped this week after touching the $115/t level last week. Major exporters kept their offers on hold as they are waiting for market clarity and expecting a rise in prices after the third Plenum of the Chinese government. However, a few export deals were concluded from India."

A miner said, "Buyers are ready to buy at 25% discount on the global benchmark fines index but we have to hold our cargoes. Export prices have been dropping following bad weather in China which impacted iron ore and steel demand. East coast-based exporters are in a wait-and-watch mode and waiting for prices to recover. However, we heard that a major miner has received a premium and a few deals are under negotiation at a 22% discount on the global index for August delivery".

As per Chinese sources, iron ore inventory at Chinese ports are edging up. It is the off-season for steel demand and steel mills are expected to reduce production. In addition, the weather continues to affect downstream steel demand, which has led to buyers preferring to wait and watch.

Price indicators

• One (1) confirmed deal was from the East Coast reported this week and was taken into price calculation under T1 trade and given 50% weightage in the index calculation. For detailed methodology Click here.
  
  
• BigMint received thirteen (12) indicative prices in the current publishing window and ten (10) were considered for price calculation as T2 inputs and given a 50% weightage.
  
  

Iron ore inventories in China's major ports increased by 1.2 mnt to 150.2 mnt on 11 July compared to the last week, according to SteelHome data. For the second time after April 2022, the iron ore inventory at Chinese ports was recorded at this level which is at a 2-year high level.

Factors impacting seaborne market

• Iron ore spot prices drop w-o-w: The benchmark iron ore fines index decreased by $8/t w-o-w to $106/t CFR China on 10 July. Iron ore prices fell this week due to weak market fundamentals coupled with sluggish steel demand. Steel and raw material prices have dropped due to rainy weather in southern China. In addition, steel mills that have recently experienced losses have opted for maintenance downtimes.
  
  
• Portside offers in China fall w-o-w: Portside offers in China of Indian iron ore fines (Fe57%) fell by RMB 15/t ($2/t) w-o-w on 11 July. Offers were recorded at around RMB 615/t ($86/t) at Qingdao Port, including all import taxes and port charges. D-o-d, portside prices increased by RMB 10/t ($1/t) today.
  
  
• DCE futures fall w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for September 2024 contract decreased by RMB 36.5/t ($5/t) w-o-w to RMB 828 ($115/t) on 11 July. However, prices showed some recovery today and increased by RMB 15/t d-o-d against RMB 813/t ($113/t) on yesterday.
  
  

Outlook

Seaborne iron ore export prices are expected to remain volatile and market participants may get some clarity next week after the third plenum of the Chinese Communist Party. Major Indian suppliers are waiting for prices to improve.