India: Iron ore fines export index falls amid global price drop, rising port stocks

• Bid-offer disparity limits export deals from India
  
  
• Spot prices in China plunge as futures drop sharply
  
  
• Iron ore stocks at Chinese ports rise by 4 mnt w-o-w
  
  

BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index decreased by $2/t w-o-w at $81/t FOB east coast on 22 February 2024. The index is hovering at a four-month low level. A deal of 55,000 t iron ore fines (Fe57%) was concluded at a 15% discount on the index, however, it could not be confirmed till the time of publishing this report.

The export market for iron ore fines remained sluggish this week after the Lunar holidays. The bids from buyers remained lower against the sellers' offers. The participants in the overseas market kept the offer firm and did not sell the material at a downtrend market flow.

A trader said, "The export market has responded very negatively after the holidays while everyone expected positive sentiments before the closing. The inquiries from buyers were decent but their bids were not feasible for Indian sellers. so everyone remained in wait-and-watch mode and expecting the bullish market sentiments in the coming days."

On the other hand, a few Chinese steel sources reported that portside offers in China for Indian iron ore fines (Fe57%) sharply decreased by RMB 60/t ($8/t) w-o-w on 22 February post-Lunar holidays. The offers were recorded at around RMB 770/t ($108/t) at Qingdao Port with inclusive of all import taxes and port charges.

The seaborne market's demand remained weak due to a port-side inventory buildup, even though players returned to the Chinese market following the Lunar New Year. Few mills in the northern China region had dropped production following the sluggish market sentiments.

Participants also stated that while medium and low-grade iron ore fines were still more affordable, most mills continued to be interested in buying them, which may support the iron ore market in the coming days.

Other highlights:

• Global iron ore prices decline w-o-w: The benchmark Fe 62% fines index sharply fell by $9.5/t to $120/t CFR China on 21 February. Prices fell for the third consecutive day amid a lack of iron ore demand post-holidays following the downtrend in the downstream steel market. As per reports, the post-holiday restocking activity failed to improve in China while numerous participants were sidelined and waiting for clearer market directions.
  
  
• DCE iron ore futures fall w-o-w: The iron ore futures on the Dalian Commodity Exchange (DCE) for the May 2024 contract sharply decreased by RMB 70/t ($10/t) to RMB 893.5/t ($124/t) on 22 February compared to RMB 963.5/t ($134/t) before Lunar holidays. However, on a d-o-d basis, prices remained largely stable.
  
  
• Iron ore port inventory in China increases w-o-w: Iron ore inventory at major Chinese ports rose by 4.05 mnt to 130.3 mnt on 18 February compared to 6 February, according to SteelHome data. The pellet inventory at the main ports of China was recorded at a ten-month high level, previously; it was seen in the second half of April 2023.
  
  

India iron ore shipment falls w-o-w: India's iron ore export shipments were recorded at 972,915 t in the third week of February compared to 908,464 t in the second 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 calculation. Thus, given 0% weightage. For detailed methodology Click here.
  
  
• BigMint received seventeen (17) indicative prices in the current publishing window and fourteen (14) were considered for price calculation as T2 inputs and given 100% weightage.
  
  

Outlook

The fines export market is expected to recover again in the coming days as Chinese mills will restock the low and medium-sized fines instead of higher-grade fines or premium material which is not viable at the current margin.