India: Iron ore fines index remains range-bound w-o-w in dull market

• Global fines spot, future prices decline w-o-w
  
  
• Discounts on Fe57% Indian fines stable at 20-23%
  
  
• China portside iron ore inventory drops this week
  
  

Export prices of Indian-origin iron ore fines remained under pressure this week with no major demand seen from Chinese mills ahead of the National Holidays. Market participants stayed away amid dull sentiments.

BigMint's weekly Indian low-grade iron ore fines (Fe 57%) export index inched down by $0.5/tonne (t) w-o-w to $53/t FOB east coast on 19 September 2024. The discount level remained similar to last week's at 20-23% on the global fines index. No other deals were reported from India in the seaborne market as major exporters chose to be cautious instead of selling at current prices, fearing potential losses in the current trading window.

According to sources, a miner from Odisha opened an export tender today for 75,000 t of Fe53.5% grade fines. As per sources, the discount offered was 30-31% on the index price.

A trader said, "Market sentiments have not improved over the week and recent fluctuation in the global fines index has weighed on the tradable prices. A few exporters are now thinking about selling cargos but the majority of them expect a surge in prices. We have not heard of any cargo sold from India in recent days. Even the iron ore miners are not getting decent prices for single-mine cargoes."

After much speculation, the US Federal Reserve's Open Market Committee (FOMC) has taken a significant step by initiating a new monetary easing cycle. It announced a 50 basis points (bps) cut to the federal funds rate. The current federal funds rate stands at 4.75-5%, marking the first cut since March 2020.

A market participant said, "The recent interest rate drop by the US Federal Reserve may benefit the iron ore industry in the near future. While the inventory levels are decreasing at China's ports, Chinese mills are hesitant to pay the asking prices to Indian exporters due to lower import margins. Market participants are left with no choice but to seek the right tradable prices for their materials."

Iron ore inventories at China's major ports decreased by 2.8 million tonnes (mnt) to 146.6 mnt on 19 September, compared to the previous week, according to SteelHome data.

Indicators

• No (0) confirmed deal was reported from the East Coast this week and therefore not considered for price calculation as T1 trade. It was given a 0% weightage in the index calculation. For the detailed methodology, click here.
  
  
• BigMint received twelve (12) 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 down w-o-w: Benchmark iron ore fines decreased by $2/t w-o-w to $90/t CFR China on 18 September. The low prices led to high trading activities, and some market players speculated that the iron ore market had reached its lowest point. There has been a resurgence in low-grade fines demand recently. The average iron (Fe) content in blast furnaces has been low, and more mills are choosing to blend low-grade cargoes with medium-grade fines, or even opting for a low-low blending option when possible.
  
  
• Portside offers in China go down w-o-w: Portside offers of Indian iron ore fines (Fe57%) in China fell by RMB 25/t ($3/t) w-o-w on 19 September. Offers were recorded at around RMB 520/t ($80/t) at Qingdao Port, including import taxes and port charges. Portside prices inched down by RMB 5/t ($1/t) d-o-d today.
  
  
• DCE futures fall w-o-w: Iron ore futures on the Dalian Commodity Exchange (DCE) for the January 2025 contract decreased by RMB 14/t ($2/t) w-o-w to RMB 693/t ($98/t) on 19 September. Future prices rose by RMB 18/t ($2/t) d-o-d against RMB 675/t ($95/t) yesterday.
  
  

Outlook

Seaborne iron ore export prices are expected to remain volatile following raw material restocking by Chinese mills.