India: Iron ore fines export index falls $10/t as Chinese port stocks rise to 2-year high

• Global iron ore fines prices fall sharply
  
  
• Discounts widen for low-grade fines
  
  

BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index fell sharply by $9.5/t w-o-w to $57/tonne (t) FOB east coast on 6 June 2024. No active deals were witnessed this week as exporters remained sidelined in a declining market. Prices have fallen significantly, with an exporter from Odisha selling 55,000 t of Fe57% iron ore fines at $80/t CFR China towards the end of last week. Fe 54% fines export price indications were at around $59-60/t CFR China.

Iron ore fines export offers dropped significantly this week on recent decline in global iron ore fines and futures prices. Weak market fundamentals after steel capacity and production regulation news in China impacted Indian iron ore fines prices in the seaborne market. Most buyers were interested in booking material at lower prices which created bid-offer disparity.

An exporter said: "Buyers' interest was in purchasing material at lower prices as they are running into import losses at higher prices. Chinese buyers demanded around 24-25% discount on the IODEX which is not favourable for Indian sellers. No active deal was concluded in any eastern Indian port this week as participants remained away from the market amid the sharp drop in prices".

Due to high domestic prices, some key exporters refrained from selling material at prevailing prices. On the other hand, port stocks at Chinese ports have continuously increased while supply remains relatively low.

An Australian mining company has increased discounts for long-term contracts on its lower-grade iron ore fines (Fe 58.5%) for June delivery. Discounts for special fines (Fe 56.5%) remain unchanged and Fe 58.5% fines has increased to 10.25% from 7.25% in May, while the discount for Fe 56.5% fines remains at 15% based on the June average of IODEX.

Price indicators

• No confirmed deals were reported 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 seventeen (17) indicative prices in the current publishing window and thirteen (13) were considered for price calculation as T2 inputs and given a 100% weightage.
  
  

Portside offers in China of Indian iron ore fines (Fe57%) decreased by RMB 30/t ($4/t) w-o-w on 6 June. Offers were recorded at around RMB 620/t ($86/t) at Qingdao Port, including all import taxes and port charges. Meanwhile, prices increased by RMB 10/t ($1/t) d-o-d amid improved market sentiments today at Chinese ports.

Iron ore inventories at China's major ports increased by 1.8 mnt to 147.3 mnt on 6 June compared to the last week, according to SteelHome data. For the second time in the last 25 months, the port inventory level has been recorded at this level. Previously, it was around 149 mnt in the last week of April 2022.

Other highlights:

• Iron ore spot prices decline w-o-w: The benchmark iron ore fines index decreased w-o-w by around $13/t to $106/t CFR China on 5 June. Prices dropped as the market continued to be under pressure due to weak fundamentals. Mills are restocking at ports as needed and inventory is high. Trading activity improved amid weakening price levels as it has led to better landed margins.
  
  
• DCE futures fall w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for September 2024 contract decreased by RMB 25.5/t ($3/t) w-o-w to RMB 839.5 ($117/t) on 6 June. Additionally, prices improved by RMB 14.5/t ($2/t) d-o-d today.
  
  
• Shipments down marginally: India's iron ore export shipments were recorded at 587,448 t in the last week of May, compared to 605,350 t in the fourth week, as per vessel line-up data maintained with BigMint.
  
  

Outlook

The seaborne export market for Indian iron ore fines is expected to remain volatile amid weak sentiment in China. Exports from India, moreover, are expected to decline during monsoons.