India: BigMint's iron ore fines export index rises $5/t w-o-w in recent deals

• Overseas discounts largely stable w-o-w
  
  
• Over 100,000 t of export deals heard from India
  
  
• Iron ore inventories in China at over 2-year high
  
  

BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index increased by $5/t w-o-w at $63/tonne (t) FOB east coast on 27 June 2024. Around 110,000 t Fe 57% fines deals were recorded from India at $76-77/t CFR China in this publishing window. The discount for lower-grade fines was 25-26% on the global fines index and remained stable compared to last week.

Indian lower-grade fines prices on the seaborne market recovered this week following the surge in global spot and future prices of iron ore fines. Some deals were under negotiations this week while a few exporters still waited as they were optimistic about the market in the near term following the third Plenum by the Chinese Communist Party which may signal policy changes.

According to market participants, the top Australian miner maintained a 15% discount for special fines (Fe56.5%) based on the July average of global index, while Fe 58.5 fines were also held steady at a 10.25% discount based on the July average of global index.

An exporter said: "Iron ore prices increased this week on the sea market with decent trade activity. Chinese mills are actively purchasing imported cargo amid expectations of some positive policy change in the next meeting to be held on 15-18 July. Buyers were seeking Indian cargos amid cost-effectiveness as higher grade fines will eat into margins."

Another miner from Odisha said that those who want to sell cargoes overseas can sell at this price as the market has remained under pressure for the last few days. The volatility of the Chinese market can also affect Indian fines as rainy weather in China may impact demand in the coming days. Some sellers are waiting for $80-82/t CFR China levels for their Fe57% fines cargoes.

As per Chinese sources, the high inventory problem has not improved at Chinese ports. The iron ore market is gaining momentum, bolstering market confidence. Traders' sentiment continues to improve. Currently, it is still the off-season for demand, and steel mills are expected to reduce production. However, the current reduction rate is lower than expected, which is supporting the demand for iron ore.

Price indicators

• Two (2) confirmed deals were reported this week and both taken into price calculation under T1 trade and given 50% weightage in the index calculation. For detailed methodology Click here.
  
  
• BigMint received thirteen (13) 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 mnt to 149 mnt on 27 June 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 indicated over 2-year high level.

Factors supporting sea-borne market

• Iron ore spot prices rise w-o-w: The benchmark iron ore fines index increased by $7/t w-o-w to $114/t CFR China on 3 July. Iron ore prices surged this week amid the rise in demand and robust market fundamentals. Interest in seaborne iron ore cargoes remained high at negotiable prices throughout the day in the market. At the portside, traders were actively procuring cargoes, while mills were mostly observing, cautious of buying at higher prices.
  
  
• China portside offers up w-o-w: Portside offers in China of Indian iron ore fines (Fe57%) rose by RMB 20/t ($3/t) w-o-w on 4 July. Offers were recorded at around RMB 630/t ($88/t) at Qingdao Port, including all import taxes and port charges.
  
  
• DCE futures surge w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for September 2024 contract increased by RMB 45.5/t ($6/t) w-o-w to RMB 864.5 ($120/t) on 4 July. However, prices remained stable on a d-o-d basis today.
  
  

Outlook

Seaborne export prices are expected to remain supportive as a few deals are under negotiations. The supportive sentiments in China will also support Indian fines prices. Trades may improve in the near term.