India: Iron ore fines index drops by $8/t w-o-w amid sharp decline in global prices

• Weak market sentiments weigh on ore prices
  
  
• Iron ore port inventories still high in China
  
  
• Discounts for Fe57% Indian fines at 21-22%
  
  

Iron ore prices fell sharply in the overseas market this week following the continuous drop in global fines spot and futures prices. The sluggish market movement was seen from buyers and sellers amid the lower buying interest of Chinese mills.

BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index decreased by $7.5/tonne (t) w-o-w to $51/t FOB east coast on 5 September 2024. The discount level was recorded at 21-22% on the global fines index. Deals have remained subdued and sellers are in wait-and-watch mode.

A top Australian miner dropped the discount to 13.25% (15% in July) for special fines (Fe56.5%) based on the September average of the global index, while those for the Fe58.5% fines were dropped to 9% in September against a 9.75% discount based on the August average of the global index.

A trader said: "The export prices continuously fell in the last few days which kept the trades away from the market. Participants are waiting for the stabilisation in the prices for deals otherwise due to this fluctuation, no one is interested in making transactions -- either seller or buyer. The current level of seaborne prices is not even viable for the miners as they normally receive some premium over the traders' cargo."

According to sources, weak market sentiments in China's steel industry are putting pressure on the Indian export market. A further decline in prices could potentially encourage port-based steelmakers in India to consider importing iron ore.

Iron ore inventories at China's major ports inched down by 0.3 million tonnes (mnt) to 150.5 mnt on 5 September, compared to the previous week, according to SteelHome data.

Indicators

• No confirmed deal was reported from the East Coast this week and taken into price calculation under T1 trade and given 0% weightage in the index calculation. For detailed methodology Click here.
  
  
• BigMint received eleven (11) indicative prices in the current publishing window and Nine (9) were considered for price calculation as T2 inputs and given 100% weightage.
  
  

Factors impacting the seaborne market-

• Iron ore spot prices fall sharply: The benchmark iron ore fines declined by $8/t w-o-w to $92/t CFR China on 4 September. Prices fell due to persistently weak downstream demand and bearish market sentiments. The anticipated seasonal boost in demand from the "Golden September and Silver October" period failed to materialise, which has been compounded by the limited availability of funds.
  
  
• Portside offers in China down w-o-w: Portside offers of Indian iron ore fines (Fe57%) in China fell by RMB 55/t ($3/t) w-o-w on 5 September. Offers were recorded at around RMB 520/t ($80/t) at Qingdao Port, including all import taxes and port charges. D-o-d, portside prices remained unchanged today.
  
  
• DCE futures decline w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for the January 2025 contract significantly decreased by RMB 81.5/t ($11.5/t) w-o-w to RMB 678.5/t ($96/t) on 5 September. D-o-d, future prices fell by RMB 11/t ($1.5/t) against RMB 689.5/t ($97/t) yesterday.
  
  

Outlook

Seaborne iron ore export prices are expected to remain volatile in the near term amid weak demand. However, the market anticipates a recovery in the coming days as mills are yet to complete their restocking ahead of the holidays.