India: Iron ore export index falls as global prices drop by over $20/t, d-o-d

Indian iron ore export prices continue to decline on falling global prices, futures and steel production cuts in China. SteelMint's weekly export index for low-grade Indian iron ore fines (Fe 57%) decreased by $12/t w-o-w to $45/t* FoB east coast India.

Activity in the Indian iron ore export market remained lacklustre as most sources are still maintaining a bearish view of the market.

"No trades were heard to have been concluded this week. This is mostly due to tighter pollution control measures and steel production cuts in China", a trader source shared.

The spot price of iron ore Fe 62% fines decreased by $31.25/t w-o-w to $130.2/t CFR China on 19 Aug'21. Prices decreased sharply by $23/t d-o-d.

Another trader said: "There is no demand for low-grade iron ore in the market. The market has crashed and so there are no takers for low-grade ore at the moment. We are expecting global iron ore Fe 62% fines prices to fall to $120/t CFR levels and Indian Fe 57% fines prices to decline to $65/t CFR China."

Rationale:

• Price indicators- No confirmed deal was reported in the current publishing window and hence given 0% weightage under T1 trade.
  
  
• SteelMint has received six (6) indicative prices and offers during the current publishing window, and five (05) were considered for price calculation as T2 inputs, being given a weightage of 100%.
  
  

Market highlights:

• DCE iron ore futures extend declines: Iron ore futures on the Dalian Commodity Exchange (DCE) declined by 6% to a six-month low on 19 Aug'21 due to increasing supply and a weak demand outlook in China. DCE iron ore futures' Jan'22 contract closed at RMB 762.5/t ($117) (-RMB 50.5, d-o-d).
  
  
• Iron ore stocks up at Chinese ports: Iron ore inventory at major Chinese ports increased to 128.8 mn t last week as against 127.2 mn t in the week before, as per data maintained by SteelHome.
  
  
  
• Freight rates stable w-o-w: Freight rates for 50,000-55,000 t export vessels from east coast India (Paradip) to China remained stable at $27/t w-o-w. However, 21-28 days' quarantine and demurrage charges remain matters of pressing concern adding to costs.
  
  
• OMC lowers base price for e-auction: OMC has scheduled an iron ore fines auction on 23 Aug'21 for 866,000 t. Base price for high-grade fines have come down by up to INR 700/t, while the floor price for low-grade fine has inched down by INR 1,350/t against OMC's Jul'21 fines auction.
  
  
• JSW to auction 23,700 t of iron ore fines from Odisha - JSW Steel has scheduled an auction for 23,700 t of Fe 55-58% iron ore fines on 24 Aug'21. The company is using the MSTC platform (a government undertaking) to conduct the e-auction from its Jajang mine in Keonjhar district, Odisha. The steelmaker is keeping the floor price for the auction at INR 2,000/t (including royalty, DMF and NMET),
  
  
• Goa to conduct 26th iron ore e-auction: The Directorate of Mines and Geology (DMG) of Goa plans to conduct the 26th e-auction for 2.037 mn t of iron ore on 27 Aug'21. The material to be put to auction consists of fines, lumps, and ROM with the highest-grade reaching Fe 58.01%. The auction is being held after a gap of almost five months.
  
  

*correction