India: BigMint's iron ore fines export index falls to three-months low

• No export deals from India post-Chinese Third Plenum
  
  
• China's iron ore inventory hits two-years high at ports
  
  

Sea-borne prices of lower-grade fines from India dropped this week following the recent iron ore fines spot, and future prices declining amid lower demand in the Chinese market. Buyers demanded discounts of 25-26% on the global fines index, which was not viable for the Indian sellers.

BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index decreased by $2/t w-o-w to $56.5/tonne (t) FOB east coast on 25 July 2024. The index has continued its downward march to hit over a three-month low -- similar levels were last seen in the second week of April. No deals relating to Fe57% fines were concluded from India in this publishing window as exporters remained cautious about selling their material in a downtrending market.

The iron ore market is facing significant challenges, with inventories in China exceeding 150 mnt, indicating that supply is surpassing demand. Exporters are increasingly opting for a wait-and-watch mode till the market improves.

An iron ore exporter said: "Prices are expected to fall more in the near term due to poor market sentiments from China. Steel demand in the domestic Chinese market affects imported raw material prices and demand. It is expected that seaborne market prices will recover in September. "

As per sources, buyers are pushing for lower prices, making it difficult for sellers to profit from exports. Indian sellers are particularly cautious, and wary of the unfavourable market conditions. The major mills cut their production or undertook maintenance shutdown.

Price indicators

• No confirmed deal was reported from the east coast this week and not taken into price calculation under T1 trade and given 0% weightage in the index calculation. For detailed methodology Click here.
  
  
• BigMint received sixteen (16) indicative prices in the current publishing window and thirteen (13) were considered for price calculation as T2 inputs and given 100% weightage.
  
  

Iron ore inventories in China's major ports increased by 2.2 mnt to 151.8 mnt on 25 July compared to the last week, according to SteelHome data. The iron ore inventory has continued its upward trajectory, hitting over a twenty-seven-month high after April 2022.

Factors impacting seaborne market

• Iron ore spot prices fall w-o-w: The benchmark iron ore fines index dropped by $4/t w-o-w to $101/t CFR China on 24 July. As per reports, September cargoes have the potential to fetch higher prices following the recent trading activity. Chinese domestic iron ore prices remained range-bound as maintenance of blast furnaces in certain steel mills began which led to changes in overall iron ore usage.
  
  
• Portside offers in China fall w-o-w: Portside offers in China of Indian iron ore fines (Fe57%) fell by RMB 30/t ($4/t) w-o-w on 25 July. Offers were recorded at around RMB 575/t ($82/t) at Qingdao Port, including all import taxes and port charges. D-o-d, portside prices inched down by RMB 5/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 47/t ($6/t) w-o-w to RMB 864.5($106/t) on 25 July. However, prices showed some recovery today and inched down by RMB 11/t ($2/t) d-o-d against RMB 775.5/t ($108/t) yesterday.
  
  

Outlook

Seaborne iron ore export prices are expected to remain under pressure due to the unfavourable market sentiments from China for lower grade fines in addition to the prevailing rainy season in India.