India: BigMint's iron ore fines export index falls sharply by $12/t w-o-w
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- Weak downstream demand in China
- Iron ore spot, futures drop sharply
- Hebei mills announce production cuts
BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index fell by $12/t w-o-w to $62/t FOB east coast on 14 March 2024. A deal of iron ore fines (Fe 57%) was heard concluded at a 19-20% discount to the index earlier this week but could not be confirmed at the time of publication.
Iron ore fines prices in the seaborne market saw a sharp drop this week due to the poor performance of global iron ore spot and futures prices. Buyers inquired about material, but their bids remained around $10/t lower than levels deemed viable by the sellers looking to sell material.
The benchmark Fe 62% fines index dropped by $11/t w-o-w to $107/t CFR China on 13 March. Prices fell due to poor market dynamics for seaborne ore coupled with sluggish downstream steel performance. Bearish demand fundamentals continue to weigh on seaborne pricing, even if mill production cuts might not last for a long time and depend on cash flow concerns.
A trader from Odisha said, "The seaborne export market was very weak this week. We have enough material at port to sell, but buyers are asking for a big discount, and global prices have already fallen significantly in the last two weeks. So we are holding the material as it is currently not feasible for us to sell."
Another trader said, "Export market prices have continuously declined after the Lunar holidays, and no one was willing to buy at decent offers from India. Indian sellers had been waiting since the lunar holidays for iron ore export prices to improve but the market went against all expectations. Before deciding whether to start shipping cargoes to the Chinese market again, it's critical that we pay close attention to the iron ore prices' steady movement."
On the other hand, a few Chinese steel sources reported that portside offers in China for Indian iron ore fines (Fe57%) fell sharply by RMB 105/t ($14/t) w-o-w on 14 March. The offers were recorded at around RMB 620/t ($88/t) at Qingdao Port inclusive of all import taxes and port charges.
Chinese steel mills have decided to increase production cuts of molten iron due to lower domestic finished steel demand. Mills in parts of Hebei province have announced production downtimes on air pollution concerns thereby impacting daily hot metal output. A few blast furnace mills have announced maintenance shutdowns. The Chinese market is facing cash flow challenges, and the infrastructure and housing sectors are in a quagmire. Sources say housing sales in China are at their lowest level in the last three years in February which shows the overall downtrend in China's economy.
Notably, iron ore inventories at China's major ports rose by 2.7 mnt to 140.9 mnt on 13 March compared to last week, according to SteelHome data. The inventory has hit a one-year high.
Other highlights:
- DCE iron ore futures plunge w-o-w: The iron ore futures on the Dalian Commodity Exchange (DCE) for the May 2024 contract significantly dipped by RMB 92/t ($13/t) w-o-w to RMB 798/t ($111/t) on 21 March compared to last week. However, on a d-o-d basis, prices inched down by RMB 9.5/t ($1/t) today.
- India iron ore shipment stable w-o-w: India's iron ore export shipments were recorded at 820,760 t in the first week of March compared to 793,331 t in the last week of February, as per vessel line-up data maintained with BigMint.
Price indicators:
- No deal was reported this week for fines Fe 57% from the East Coast and not taken into consideration for calculation. Thus, given 0% weightage. For 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.
Outlook:
The seaborne export market for Indian iron ore fines may remain volatile following sluggish steel demand and high inventory at Chinese ports.
